Abstract By diverting the waters of the River Mersey into a neighbouring basin, the Parangana Dam has changed the hydrological character of the downstream river. The flow records of three gauging stations, located at distances of 10, 67 and 88 km below the dam, provide the basis for identifying the changes. Intermediate discharges have decreased the most and even the furthest downstream station are 50% lower than before. The flow extremes, at both ends of the scale, have been less affected, and particularly the less frequent flood discharges which are augmented by overspill. Indeed the highest flood on record, with a recurrence interval of over 500 years, occurred in the post-dam period. The entry of unregulated tributaries in the middle section separates a much changed upstream hydrology from a downstream one able to mitigate the worst effects of the dam except at intermediate discharges. Field survey, air and ground photograph analysis are used to assess the impact of impoundment on the downstream channel. The main changes involve the expansion of existing lateral bars and the growth of new ones, but such deposition and the consequent narrowing of the channel are rather localized. The invasion of bar surfaces by vegetation could accelerate the process, but the general coarseness of the channel bed and the lack of fine material for bank building will severely delay adjustment of the Mersey channel. The chemical and biological character of the river could be adversely affected by the altered flow regime, particularly in those reaches immediately below the dam.