The aim of this study was to identify the diverse macroinvertebrates present in river Mahanadi, Cuttack in India and to evaluate the role of macroinvertebrates in assessing river water quality and pollution level. We conducted field study of the river at Cuttack (85°46’21.29” E 20°28’15.81” N & 85°49’45.23” E 20°30’50.00” N) during 2013-2014 and collected aquatic invertebrate samples from 12 stations on river basin. The samples were analysed to explore the various families of Macroinvertebrates communities present in river Mahanadi, to examine the status of water quality of the river using biological indicators, to determine whether there are relationships between water chemistry and presence of typical macroinvertebrates and to develop a Macroinvertebrates based index to bio-assessment of Mahanadi River. A total of 484 taxa were identified and about 244 taxa of bivalves and 184 taxa of gastropods were collected. Presence of high number of pollution tolerant taxa and pollution sensitive taxa (Ephemeroptera, Plecoptera, Tricoptera and Chironomidae) indicated increased risk of water pollution and calculated biotic score (8), biological monitoring working party (BMWP) score (52), average score per taxa (ASPT) score (4) and macroinvertebrate-based index (MBI) value indicated moderate pollution level in the river. We recorded pH, total hardness, dissolved oxygen (DO), biological oxygen demand (BOD), total nitrite, chloride and total phosphate of water and physico-chemical parameters supported the values of biological assessment of water quality. Studying macaroinvertebrates helped to gain knowledge about aquatic faunal biodiversity in river Mahanadi and to develop a method for diagnosis of the health of river ecosystem and for measuring water pollution level.