Rapid urbanization in China has dramatically deteriorated the water quality of streams and threatening aquatic ecosystem health. This study aims to 1) assess the impacts of urbanization on water quality and macroinvertebrate composition and 2) address the question of how urbanization affects macroinvertebrate distribution patterns. Environmental variables over multispatial scales and macroinvertebrate community data were collected on April (dry season) and September (wet season) of 2014 and 2015 at 19 sampling sites, of which nine had a high urbanization level (HUL), six had moderate urbanization level (MUL) and four had low urbanization level (LUL), in the Liangjiang New Area. The results of this study showed that macroinvertebrate assemblages significantly varied across the three urbanization levels. The sensitive species (e.g., EPT taxa) were mainly centralized at LUL sites, whereas tolerant species, such as Tubificidae (17.3%), Chironomidae (12.1%), and Physidae (4.61%), reached highest relative abundance at LUL sites. The values of family biotic index (FBI) and biological monitoring working party (BMWP) indicated the deterioration of water quality along urbanization gradient. Seasonal and inter – annual changes in macroinvertebrate communities were not observed. The results of variation partitioning analyses (CCAs) showed that habitat scale variables explained the major variation in macroinvertebrate community composition. Specifically, the increased nutrient concentrations favored tolerant species, whereas high water flow and substrate coarseness benefitted community taxa richness, diversity and EPT richness. Considering the interactions between scale-related processes, the results of this study suggested that urbanization resulted in less diverse and more tolerant stream macroinvertebrate assemblages mainly via increased nutrient concentrations and reduced substrate coarseness.