Biological functional traits help to understand specific stressors that are ignored in taxonomic data analysis. A combination of biological functional traits and taxonomic data is helpful in determining specific stressors which are of significance for fish conservation and river basin management. In the current study, the Taizi River was used as a case study to understand the relationships between the taxonomic and functional structure of fish and land use and water quality, in addition to determining the thresholds of these stressors. The results showed that taxonomic structure was significantly affected by the proportion of urban land and specific conductivity levels, while functional metrics were influenced by the proportions of farmland and forest. Threshold indicator taxa analysis found that Phoxinus lagowskii, Barbatula barbatula nuda, Odontobutis obscura, and Cobitis granoei had negative threshold responses along the gradients of urban developments and specific conductivity. There was a significant change in fish taxonomic composition when the proportion of urban land exceeded a threshold of 2.6–3.1%, or specific conductivity exceeded a threshold of 369.5–484.5 μS/cm. Three functional features—habitat preference, tolerance to disturbances, and spawning traits—showed threshold responses to the proportion of farmland and forest. The abundance of sensitive species should be monitored as part of watershed management, as sensitive species exhibit an earlier and stronger response to stressors than other functional metrics. Sensitive species had a positive threshold response to the proportion of forest at 80.1%. These species exhibited a negative threshold response to the proportion of farmland at 13.3%. The results of the current study suggest that the taxonomic and functional structure of fish assemblages are affected by land use and water quality. These parameters should be integrated into routine monitoring for fish conservation and river basin management in the Taizi River. In addition, corresponding measures for improving river habitat and water quality should be implemented according to the thresholds of these parameters.