Diel variation in interstitial physical-chemical features and hydrologic exchange between the hyporheic zone and surface environment were studied in Sycamore Creek, Arizona. Wells were established beneath the wetted perimeter of the surface stream and beneath exposed alluvial sediments lateral to surface water. Dissolved oxygen (DO) was reduced in the interstitial environment (<50% saturation), but hyporheic water was enriched in nitrate nitrogen (NO3-N) and soluble reactive phosphorus (SRP). Time-of-day and location of wells interacted significantly to produce distinct patterns of diel variation in NO3-N and SRP in wells located beneath the wetted perimeter. In lateral wells, NO3-N concentration showed significant spatial variation, but exhibited no significant variation among sampling times within a day. Vertical hydraulic gradient varied from + 0.29 to −0.84 over a 90 m study reach and hydraulic heads varied by as much as 9 cm on a diel basis. Concentration and flux of NO3-N was greatest in surface water overlying upwelling regions at night when upwelling heads were greatest. Downstream decreases in NO3-N reflected loss of groundwater discharge into surface water and strong assimilatory demand by surface algal communities. Hydrologically mediated exchange can have strong influence on physical-chemical and biologic conditions in the hyporheic zone, benthic environment and associated surface water.