While provision of in-stream habitat complexity remains the dominant approach to stream restoration, evidence of positive effects on species richness, individual abundance and community composition is inconsistent. We assessed the effect on in-stream macroinvertebrate assemblages of experimentally increased complexity in woody debris, the dominant hard substrate in our study streams, which span a range of urban impact. This permitted an assessment of the interaction of small-scale physical habitat complexity and a large-scale driver of hydrologic and geomorphic change in streams, urban stormwater runoff. Our experimental wood treatments disproportionately dislodged and buried in more urban streams. A multi-taxon model of counts of taxa colonising remaining woodblocks found increased abundance of more species in complex grooved wood blocks compared to smooth blocks in the absence of urban impacts, than in streams of urbanized catchments. Differences in richness between smooth and grooved blocks were small compared to differences between urban and (richer) non-urban streams. Increased abundance supports the hypothesis of increased availability of resources with increased physical complexity. The reduction of these effects in more urban streams (and greater loss of our experimental treatments) points to catchment-scale urban impacts increasing disturbance to reduce the availability of resources. Restoration of habitat complexity in streams without catchment-scale drivers of degradation is likely to have positive benefits to in-stream biotic assemblages, but the efficacy of such approaches in catchments subject to urban stormwater runoff will be greatly diminished. In such cases, restoration activities should first be aimed at controlling the larger-scale problem.