Historically, desert drainages of the American southwest supported productive riverine wetlands (ciénegas). Region-wide erosion of ciénegas during the late 19th and early 20th century dramatically reduced the abundance of these ecosystems, but recent reestablishment of wetlands in Sycamore Creek, Arizona, USA, provides an opportunity to evaluate the mechanisms underlying wetland development. A simple model demonstrates that density-dependent stabilization of channel substrate by vegetation results in the existence of alternative stable states in desert streams. A two-year (October 2004–September 2006) field survey of herbaceous cover and biomass at 26 sites located along Sycamore Creek is used to test the underlying assumption of this model that vegetation cover loss during floods is density dependent, as well as the prediction that the distribution of vegetation abundance should shift toward bimodality in response to floods. Observations of nonlinear, negative relationships between herbaceous biomass prior to flood events and the proportion of persistent vegetation cover were consistent with the alternative stable state model. In further support of the alternative-state hypothesis, vegetation cover diverged from an approximately normal distribution toward a distinctly bimodal distribution during the monsoon flood season of 2006. These results represent the first empirically supported example of alternative-state behavior in stream ecosystems. Identification of alternative stable states in desert streams supports recent hypotheses concerning the importance of strong abiotic-disturbance regimes and biogeomorphic mechanisms in multiple-state ecosystems.