Studies have shown significant terrestrial-aquatic linkages between landscape and stream ecosystems spanning multiple spatial scales.  Poff (1997) proposed a conceptual model using nested environmental filters to describe the disparity between large (e.g., region and watershed) and small scale (e.g., reach and microhabitat) processes driving the structure of benthic macroinvertebrate assemblages in streams.  Variation in functional traits of invertebrates among assemblages provides insight into which environmental constraints drive community formation at particular scales.  We surveyed benthic macroinvertebrates in four forested headwater streams in the Nantahala National Forest in western North Carolina and described assemblages at the microhabitat scale based on functional traits.  Survey data from 26 forested headwater streams within the Blue Ridge physiographic province were used to create watershed scale trait descriptions.  We used a neutral lottery model to create a null distribution of relative abundances for observations of benthic macroinvertebrates at each scale when assuming functional equivalence among all taxa observed in the region.  Patterns in the distribution of traits associated with fecundity and life cycle rate at the microhabitat (p < 0.05) scale suggest small scale disturbances such as seasonal flooding are organizing macroinvertebrate communities within watersheds; however, this pattern does not hold among watersheds within the region.