We investigated effects of sedimentation on stream fish communities and their invertebrate prey. A second aim was to determine whether removing fine sediment from streambed substrata can reverse negative effects of sedimentation. We manipulated two farmland streams for two months, by adding or removing fine sediment in 50-m reaches twice (on the first day and one month later). Each stream contained one addition, one removal and one control reach separated by buffers. Streams were sampled five times, 2 days before, 2 days and 27 days after manipulation 1 (with the third occasion also being 2 days before manipulation 2), and 4 and 34 days after manipulation 2. Electrofishing was conducted once, at the end of the experiment. Sampling included physicochemical and invertebrate community variables, fish densities and several fitness and diet variables for juvenile brown trout. Benthic invertebrate taxon richness and density of the common caddis Aoteapsyche responded negatively to sediment addition and positively to sediment removal. Brown trout density (estimated repeatedly using nocturnal spotlighting) showed the same patterns, and densities of native fish (determined by electrofishing) exhibited similar trends. Further, trout condition was poorer in sediment addition reaches than in removal or control reaches. Our results imply that increased deposited fine sediment levels can degrade stream habitats and negatively affect invertebrate and fish communities, including density and condition of trout, which are commercially and/or recreationally important in many countries. These findings should help develop mitigation plans for current farming practices and improved future best management practices.