Hatchery and wild juvenile populations of steelhead Oncorhynchus mykiss and coho salmon Oncorhynchus kisutch, in a small coastal watershed in central California, were sampled throughout the year in a stream and at a hatchery. Both species grew faster in captivity than in the wild. Hatchery fish of both species had elevated gill Na+, K+-ATPase activity, and thus were ready to enter sea water when planted during the wild fish migration. Downstream migrant trapping and stream surveys indicated that hatchery smolts went to sea soon after planting, consequently avoiding the effects of competition and predation that commonly occur when hatchery-bred juveniles are released. Adult steelhead were also sampled throughout the watershed. The return of hatchery steelhead was highly synchronized with that of wild steelhead, indicating that hatchery propagation had no adverse effects on the timing of the run. A disproportionate number of hatchery steelhead returned to the tributary where the hatchery was located, despite being planted throughout the watershed. Hatchery steelhead did not differ in mean age or size from wild steelhead. Observations of spawning indicated that hatchery and wild steelhead interbreed. Competition for mates or spawning substratum was rarely observed between hatchery and wild steelhead. Many of the problems commonly associated with artificial propagation can be avoided in small coastal watersheds when wild broodstock are used and fish are released as smolts.