Three watersheds within a marsh system draining into Lake Michigan in northwest Indiana, USA, were studied for differences among land use, habitat conditions and water quality to determine their influence on macroinvertebrate community structure. Much of this area had been altered for agricultural, commercial, industrial and residential land uses. Land use, habitat conditions and water quality were significantly different among watersheds. Water quality varied more among streams than within streams. Several variables were related to land use, especially dissolved ions. Macroinvertebrate communities depicted neither a healthy wetland nor a healthy stream system. Some sites were typical of a sand-based, erosional stream system and others were more typical of a wetland system. Communities were different both in and among streams; relationships with water chemistry variables and land use suggested that community structure was a function of local-scale, abiotic factors rather than watershed-scale characteristics. These results show the importance of local-scale influences on the structure and function of macroinvertebrate communities. The development of the methods used to measure these local-scale landscape factors is important to restoration and management.