The influence of groundwater discharge on aquatic ecosystems of alpine streams at the patch to reach-scale (1–100 m) has received little attention to date. In this study, small-scale variation was evaluated for an alpine stream in the Canadian Rockies receiving groundwater on one side from a large spring. The evaluation was based on measures of (1) spatial changes in the physico-chemical properties that are commonly used to classify stream types for ecological purposes and (2) variation in periphyton (predominantly diatom and macroalgal) communities. Stream water and algae were sampled along longitudinal and lateral transects of the stream. The results showed that groundwater discharge increased stream flow, electrical conductivity, pH, nitrate concentrations, and turbidity, and lowered temperature. This caused variation in stream physico-chemical properties along the stream reach and laterally across the mixing area. The influence of the groundwater discharge was reflected in a change in the stream's ecological classification from nivo-krenal (i.e. snowmelt–groundwater mix) to krenal (i.e. groundwater dominated). The discharge of groundwater to the stream was also associated with changes in the algal community both downstream (reach-scale) and across the mixing area (sub-reach-scale), as indicated by differences in relative abundance of dominant diatom taxa and macroalgae, including a proliferation of the chrysophycean alga Hydrurus. Groundwater-affected areas also showed reduced species richness, but increased biomass. These findings have implications for the sampling of benthic algal communities in alpine settings and their use as indicators of climate and land-use changes. Copyright © 2010 John Wiley & Sons, Ltd.