Diel fluctuations in stream flow during baseflow have been observed in many streams and are typically attributed to water losses from evapotranspiration (ET). However, there is no widely transferable conceptual model that explains how ET results in diel fluctuations in streamflow at the watershed outlet. For fluctuations to occur, two factors must be present: (1) some process must generate the fluctuations and transfer them to the stream channel, and (2) fluctuations must be accumulated and transported down the stream network in such a way that they arrive at a stream gauge as a coherent signal. We have previously shown how stream flow velocity affects the transport of diel fluctuations in discharge through a stream network. Here, we examined how riparian ET and hyporheic exchange flows generate diel fluctuations in discharge. We hypothesized that ET would cause a slight drawdown of riparian aquifers during the day, slightly increasing head gradients away from the stream and slightly reducing head gradients back to the stream. Thus, slightly more water would flow into the hyporheic zone than is returned to the stream, gradually reducing stream discharge. The process would be reversed at night. Using stream-tracer experiments and riparian water-level data, we tested two hypotheses related to this conceptual model—that the amplitude (H1) and time lag (H2) of diel aquifer drawdown would be constant over the summer. Neither hypothesis was supported by our data. We conclude that the processes that link watershed ET with streams include both local- and watershed-scale effects. Conceptual models attempting to explain diel fluctuations need to include the combined effects of ET on lateral inputs and hyporheic exchange flows, the redistribution of water within riparian aquifers, and the transport of ET signals from the whole stream network to the stream gauge. Copyright © 2009 John Wiley & Sons, Ltd.