This paper examines the effect of implementing a water transaction program to address potential water quality limitations for returning adult fall-run Chinook salmon in a stream system where the agriculture is the dominant land and water use. Water transactions are becoming an increasingly used approach to provide instream flows during periods when there are competing water uses. Water transactions are often used to achieve ecological objectives, but their water quality or biological effects are rarely quantified. The effects of a water transaction implemented in the Shasta River were evaluated using a spreadsheet model to quantify changes in dissolved oxygen conditions as they relate to discharge, pool volumes, holding habitat capacity, and potential dissolved oxygen demand by holding fish. The results indicate that water transactions may mitigate potential water quality impairments by decreasing the residence time in holding habitat, and are particularly effective during periods when flows are low, holding habitats are near carrying capacity, and dissolved oxygen demand by fish is elevated.