Studies have shown significant terrestrial-aquatic linkages between landscape and stream ecosystems spanning multiple spatial scales.  Poff (1997) has suggested a conceptual model using nested environmental filters to describe the disparity between large (e.g., region and watershed) and small scale (e.g., reach and microhabitat) processes driving the structure of benthic macroinvertebrate assemblages in freshwater ecosystems.  Functional traits of the invertebrates in an assemblage provide insight to which environmental constraints are driving community formation at that scale of observation.  We surveyed benthic macroinvertebrates in four forested headwater watersheds in the Nantahala National Forest in western North Carolina and described assemblages at three scales of observation (microhabitat, reach, and watershed) based on functional traits.  We used a neutral lottery model to create a null distribution of relative abundances for observations of benthic macroinvertebrates at each scale when assuming functional equivalence among all taxa observed in the region.  We found traits associated with dispersal ability and life cycle rate may affect community structure at microhabitat and reach scales (p < 0.005) and traits associated with niche selection (functional feeding group, rheophily, habit, and body size) influence community structure at the watershed scale (p < 0.005).