Ongoing development of coalbed natural gas in the Powder River structural basin in Wyoming and Montana led to formation of an interagency task group to address concerns about the effects of the resulting production water on biological communities in streams of the area. The interagency task group developed a monitoring plan and conducted sampling of macroinvertebrate, algal, and fish communities at 47 sites during 2005#08 to document current ecological conditions and determine existing and potential effects of water produced from coalbed natural gas development on biological communities. Macroinvertebrate, algal, and fish community composition varied between drainage basins, among sites within drainage basins, and by year. Macroinvertebrate communities of the main-stem Tongue River were characterized by higher taxa richness and higher abundance of Ephemeroptera, for example, compared to macroinvertebrate communities in plains tributaries of the Tongue River and the main-stem Powder River. Fish communities of the Tongue River were characterized by higher taxa richness and abundance of introduced species compared to the Powder River where native species were dominant. Macroinvertebrate community metric values from sites in the middle reach of the main-stem Powder River, from below Willow Creek to below Crazy Woman Creek, differed from metric values in the upper and lower reaches of the Powder River. Metrics indicative of communitywide differences included measures of taxa richness, relative abundance, feeding mode, and tolerance. Some of the variation in the macroinvertebrate communities could be explained by variation in environmental variables, including physical (turbidity, embeddedness, bed substrate size, and streamflow) and chemical (alkalinity and specific conductance) variables. Of these environmental variables, alkalinity was the best indicator of coalbed natural gas development because of the sodiumbicarbonate signature of the production water. Algal samples from the main-stem Powder River generally confirmed the pattern observed in the macroinvertebrate communities. Algal communities at sites in the middle reach of the Powder River commonly were characterized by dominance by a single taxon and by low biovolume of algae compared to other sites. In contrast to the macroinvertebrate and algal communities, species richness of fish communities was highest in the middle reach of the Powder River. Although a few significant differences in fish metrics were determined along the main-stem Powder River, the differences did not correspond to the pattern observed for the macroinvertebrate and algae communities. Differences in biological communities were noted between years, potentially due to the effects of drought. Macroinvertebrate community metrics, such as Diptera taxa richness, were significantly different in the severe drought year of 2006 from metric values in 2005 and 2007#08. Waterquality data collected during the study indicated that, with few exceptions, water-quality constituents generally did not exceed State or Federal acute and chronic criteria for the protection of aquatic life.