Abstract North American beavers (Castor canadensis) are ecosystem engineers that create novel habitats in stream ecosystems. Although driven to the edge of extinction by historical over‐exploitation, beavers are recolonizing much of their former range. In the Southern Appalachian Mountains beavers alter habitats occupied by diverse fish communities across a mosaic of changing forest cover and management priorities. Fishes were sampled from nine streams with active beaver ponds and from seven streams with inactive ponds in the Southern Appalachians during summer 2019. The status of beaver ponds was among the most important factors affecting fish communities; however, both active and inactive beaver ponds affected fish community structure, α‐diversity, and local contributions to β‐diversity (LCBD). Fish α‐diversity was lower in reaches from streams with active ponds and the magnitude of this reduction was dependent on the position relative to a pond. However, both active and abandoned beaver ponds and pond tail races had higher LCBD values compared with free‐flowing reaches. Arcsin‐transformed forest cover did not improve the model fit for any dependent variables. Indicator species analysis found that two species had an association with active beaver ponds, whereas eight species were associated with inactive beaver ponds or free‐flowing reaches. The effects of beaver impoundments on fish communities in Appalachian streams are dependent on the pond activity level and spatial context. Although diversity and species richness may be reduced in individual habitats, beaver ponds contribute to higher biodiversity at a regional spatial scale. An increased understanding of beaver effects on Southern Appalachian fish communities will enable stakeholders to make informed decisions regarding the management of sensitive or economically important fishes. Mitigating conflicts between sensitive resources and these ecosystem engineers will become an increasingly important management concern as beaver populations recover in the Southern Appalachians.