Excessive loading of fine sediment is one of the most serious impacts of land-use on stream ecosystems in arid and semi-arid environments. Detrimental direct effects of excessive fine sediment are well documented for fish, invertebrates, and buried periphyton. Periphyton growing on clear surfaces may also be indirectly affected by deposited fine sediment, but these indirect effects remain poorly known. Two hypothesized mechanisms for indirect effects of fine deposited sediment on periphyton include hydraulic changes resulting from a smoothed riverbed, and changes in ambient grazer biota resulting from embedded substrates. We manipulated fine sediment in experimental channels and quantified periphyton accrual, metabolism, and nutrient uptake under both natural and reduced grazer conditions. Grazers were reduced by electric fence chargers surrounding experimental tiles in each sediment treatment, allowing us to contrast the indirect effect of altered food web dynamics from the direct effect of altered hydraulic conditions. Results after thirty and sixty days suggest periphyton was not affected by hydraulic contrasts imposed by our sediment manipulation. While periphyton accrual, metabolism, and nutrient uptake did not differ among sediment manipulations, ambient grazing stimulated greater nitrogen uptake and greater metabolism per unit mass. Our results suggest under low flow summer conditions grazer effects outweigh any indirect hydraulic effects of a smoother bed due to deposited fine sediment.