Abstract – In this study, we investigated how taxonomic and functional diversity of fish communities is influenced by forest cover and mesohabitat types in Neotropical lowland streams. We sampled fish fauna of 126 five-metre-long mesohabitats using an electrofishing unit in forested (n = 3) and deforested (n = 3) streams in the upper Paraná River basin, south-eastern Brazil. According to velocity and depth, three mesohabitat types have been considered: riffles (shallow and fast-flowing habitat), pools (deep and slow-flowing habitat) and runs (intermediate depth and velocity). Seven functional traits and 27 trait categories related to ecological, behavioural and life-history aspects of fish were considered. Our results indicate that forest cover and mesohabitat type influence fish communities in different ways. Whereas deforestation affects communities primarily through changes in diversity (functional and taxonomic), mesohabitat types determine changes in the functional composition. The increased diversity in deforested mesohabitats is driven by a decrease in species turnover among habitat patches within streams. This can be attributed to new feeding opportunities and microhabitat availabilities in deforested streams so favours the occurrence of species having a particular set of traits, indicating a strong habitat–trait relationship.