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Freshwater systems are projected to experience increased hydrologic extremes under climate change. To determine how small streams may be impacted by shifts in flow regimes, we experimentally simulated flow loss over the span of three summers in nine 50 m naturally fed stream channels. The aquatic insect community of these streams was sampled before, during, and after experimental drought treatments as well as following one unforeseen flood event. Abundance, richness, and beta diversity were measured as indicators of biotic effects of altered flow regimes. Abundance declined in proportion to flow loss. In contrast, we observed a threshold response in richness where richness did not decrease except in channels where losses of surface flow occurred and disconnected pools remained. The flood reset this pattern, but communities continued their prior trajectories shortly thereafter. Beta diversity partitions suggested no strong compositional shifts, and that the effect of drought was largely experienced uniformly across taxa until flow cessation. Pools served as a refuge, maintaining stable abundance gradients and higher richness longer than riffles. Upon flow resumption, abundance and richness returned to pre-treatment levels within one year. Our results suggest that many taxa present were resistant to drought conditions until loss in surface flow occurred.