Summary The Ecological Limits of Hydrologic Alteration (ELOHA) method described in Poff et al. (2010) was applied to streams and small rivers in a large central region of the Potomac River basin in the U.S.A. The area, which is topographically complex, has karst geology, is increasingly urban and has few flow‐altering impoundments, allows a test of the flexibility and applicability of the ELOHA method's four steps: build a hydrological foundation, calculate flow alteration, classify streams and develop flow alteration–ecology (FA‐E) relationships. A hydrological foundation of baseline (undisturbed) and current (existing) hydrographs was simulated for 747 catchments using the Chesapeake Bay Program Hydrologic Simulation Program‐FORTRAN (HSPF) model and the Virginia Department of Environmental Quality Online Object Oriented Meta‐Model (WOOOMM) routing module. The outlet of each catchment was associated with one, and sometimes two or more, stream macroinvertebrate sampling sites. Pairing each catchment's simulated current flow with its own simulated baseline flow produced estimates of flow alteration that reflect the combination of natural and anthropogenic factors controlling streamflow in individual catchments. Flow metrics from the baseline and current simulations were compared with observed values from gauged streams in undisturbed and disturbed catchments. The model may have failed to simulate streamflow well in small urbanised catchments on or near karst geology, but observed data were insufficient to fully evaluate model behaviour in these units. Elsewhere, simulated and observed values of 13 of the 15 tested flow metrics generally agreed well. A stream hydrological classification system to account for natural biological variability was not feasible in the study area for two reasons. First, the natural landscape features that most strongly govern undisturbed streamflows (catchment size and karst geology) do not greatly influence undisturbed macroinvertebrate communities. Second, the study area's complex topography ensures that many streams crossed physiographic boundaries or flowed through karst geology before reaching the macroinvertebrate sampling sites. Stream macroinvertebrates responded strongly to alteration in the duration and frequency of both high and low flow events, rise rate, flashiness and magnitude of high flow events. They did not respond to the alteration in middle‐ and low‐magnitude flow metrics, fall rate or extreme low flow frequency. Flow alteration–ecological relationships were developed for combinations of six flow metrics and seven macroinvertebrate metrics using quantile regression and conditional probability methods. Of the seven macroinvertebrate metrics, % scrapers, % clingers and the Chessie BIBI were most affected by flow alteration. Degraded habitat and water quality conditions modify and, if strong enough, conceal the flow alteration–ecological relationships. Water quality and habitat improvements can potentially ameliorate the impacts of flow alteration. Resource managers need to view each stream system holistically and consider all anthropogenic stressors before the impact of existing or future flow alteration can be determined. Overall, the ELOHA approach appears to have worked well in a large river basin with complex topography, karst geology, few flow‐altering dams, many urban areas and macroinvertebrates as the ecological response variables.