Small hydropower (SHP) is promoted as a pro-poor renewable energy source that does not have the negative social impacts of large dams. This article challenges these claims, using data from a household survey in China’s upper Red River Basin. We find that SHP can fragment river systems in ways that reduce irrigation water availability, provoke changes to agricultural practices, and negatively impact river health. These social impacts of river fragmentation mainly occur in villages situated between a plant’s intake and outflow. The frequency of plant water diversions due to continued generation in the dry season significantly predicts all social impacts; installed capacity of the plant and the quality of the village’s irrigation infrastructure predict some impacts. Villages with strong local governance can negotiate with the plant to temporarily halt generation when irrigation water is needed, lessening social impacts. Our findings reveal that SHP plants are not as benign as they are made out to be; they must be built and managed according to community needs.