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Abstract Determining how streams develop naturally, particularly the ecological role of newly developed riparian canopy cover, is essential to understanding the factors that structure new stream communities and provides valuable information for restoring highly disturbed ecosystems. However, attempts to understand primary succession in riverine ecosystems have been hindered by a lack of data owing to the infrequent formation of new rivers on the landscape. In the present study, we used five streams formed following the 1980 eruption of Mount St. Helens (WA, USA) to examine the influence of canopy cover development on algal and benthic macroinvertebrate assemblages, biomass, and organic matter processing. Newly established closed canopy reaches had less available light, but no significant differences in algal biomass or macroinvertebrate assemblages compared to open canopy reaches. Instead, algal and macroinvertebrate communities were structured mainly by hydrologic differences among watersheds. In contrast, organic matter processing rates were sensitive to canopy cover development, and rates were faster under closed canopies, especially in late summer or after terrestrial preconditioning. After 40 years of stream and riparian primary successional development, canopy cover strongly influences ecosystem function, but aquatic organism assembly was more influenced by physio-chemical and hydrologic variation. Our findings provide insight into the development of in-stream assemblages and ecosystem functions, which is also relevant to efforts to address major disturbances to stream channels, such as volcanic eruptions, floods, forest fires, and clear-cut logging.