Hydropower is a threat to freshwater fishes. Despite a recent boom in dam construction, few studies have assessed their impact on mega-diverse tropical rivers. Using a before-after study design, we investigated the early impacts of the Belo Monte hydroelectric complex, the third-largest hydropower project in the world, on fishes of the Xingu River, a major clear-water tributary of the lower Amazon. We explored impacts across different river sectors (upstream, reservoir, reduced flow sector, and downstream) and spatial scales (individual sectors vs. all sectors combined) using joint species distribution models and different facets of diversity (taxonomic, functional, and phylogenetic). After 5 years of the Belo Monte operation, species richness declined ~12% in lentic and ~16% in lotic environments. Changes in abundance were of less magnitude (<4%). Effects were particularly negative for species of the families Serrasalmidae (mainly pacus), Anostomidae (headstanders), Auchenipteridae, and Pimelodidae (catfishes), whereas no taxonomic group consistently increased in richness or abundance. The reservoir and downstream sectors were the most impacted, with declines of ~24–29% in fish species richness, overall reductions in fish body size and trophic level, and a change in average body shape. Richness and abundance also declined in the reduced river flow, and changes in size, shape, and position of fins were observed. Relatively minor changes were found in the upstream sector. Variation in functional and phylogenetic diversity following river impoundment was subtle; however, across sectors, we found a reduction in functional divergence, indicating a decline in the abundance of species located near the extremities of community functional space. This may be the first sign of an environmental filtering process reducing functional diversity in the region. Greater changes in flow and habitats are expected as hydropower operations ramp up, and continued monitoring is warranted to understand the full scope and magnitude of ecological impacts.