Understanding of the ecological impacts of drought on river systems is limited by their infrequency, and lack of reference sites and pre-event data. Human disturbance including flow regulation intensifies the effects of drought, and creates conflicts for water resources. Determining how much water is required to maintain ecosystems while still meeting consumption needs is a difficulty faced by many water managers.  Prolonged drought in the Australian Capital Territory resulted in reduced river flows on the Cotter River, which supplies water for Canberra. Flows at the most downstream dam were reduced from an average of 15 MLd^-1 to 5 MLd^-1, released in cycles of 3 MLd^-1 for 14 days followed by 14 MLd^-1 for 3 days. Under this regime the macroinvertebrate community became numerically dominated by taxa characteristic of poor water quality, habitat availability was reduced, and periphyton cover increased. Consequently, the flow regime was altered, releasing cycles of 2 MLd^-1 for 28 days followed by 20 MLd^-1 for 3-4 days. A 20 MLd^-1 flow was sufficient to reduce periphyton, improved the macroinvertebrate community and increased available habitat, demonstrating that the iterative field trials were able to provide evidence of the appropriate flow levels and regime to achieve desired environmental benefits.