As a part of the Long-term Urban Ecosystem Observation and Research Station in Xiamen (Xiamen LUEORS) with the Environmental Internet of Things (EIoT) as its technical support, southeast China by the Institute of Urban Environment, Chinese Academy of Sciences, long-term monitoring was established in an urbanizing watershed to understand the effects of urbanization on stream water quality. Six monitoring sites were established within forested headwater (Headwater), reservoir (Reservoir), agricultural (Agriculture, two locations), suburban residential (Residence), and estuarine (Estuary) locations within the Bantou reservoir watershed. Results from data collected in the whole year of 2012 show that in-stream total dissolved nitrogen (TDN) concentrations were significantly higher in the agricultural and residential sites and in the cool season. Although dissolved inorganic nitrogen (DIN) in stream water was dominated by -N rather than -N except in the headwater and estuary sites, -N concentrations were relatively greater in the residential and two agricultural sites than other sites. Dissolved organic nitrogen (DON) in stream water was high, comprising more than half of TDN in the forested headwater and estuary sites and nearly one third of TDN in other sites. Rain events (rainfall on or between the sampling dates) did not significantly influence nitrogen concentrations in stream water. Surface sediments from the different sites had similar denitrification enzyme activity (DEA), comparable to previous studies. Potential nitrification (potential ammonium oxidation, PAO) was significantly greater in the agricultural and residential sites (P < 0.05). These preliminary results suggest that land-use change has significant effects on watershed nitrogen dynamics in southeast China and that these effects differ somewhat from results observed in other parts of the world. The difference might be due to the ‘real’ urbanizing watershed in comparison with the stabilized watersheds with little development in the developed countries.