- The morphology and ecological importance of habitats associated with the margin of third-order stream channels in the Oregon Cascades were studied in streams in three different riparian types: 450-year-old conifers, 40-year-old alder, and an open, herbaceous-dominated clearcut. Margins, backwaters, and side channels in streams create important habitat for fry of cutthroat trout (Salmo clarki clarki) and support benthic invertebrate assemblages of high denSity and distinctive composition. These lateral habitats are characterized by slow, shallow water, heterogeneous size distribution of substrates, abundant detritus, and by hydraulic and morphologic persistence. In the study reaches, area of lateral habitat was maximum in early summer, averaging 15 percent of total stream area. The amount of lateral habitat decreased with either lower or higher flows. During a 1-yr period lateral habitats in the coniferous site changed the least. The volume and hydraulic characteristics of individual lateral habitats were functions of the morphology of the structures that formed the habitat and the orientation and location of the habitat relative to the central axis of the strea Large woody debris and large boulders created lateral habitats that were larger, had longer hydrologic residence times, and were more persistent when streamflow changed than lateral habitats formed by small boulders and cobble. Stream margins and backwaters were major sites of detritus storage. Average detritus standing crop in backwaters and stream margins was 5 to 15 times greater than standing crops in riffles or pools in the same stream. Detritus at the coniferous reach had higher organic matter content and a greater percentage of lignin than detritus at the deciduous reach. Detritus at the open reach was much lower in organic matter content, but the ratio of cellulose to lignin was greater than in the forested reaches. The activity of microbial assemblages associated with fine detritus was generally highest at the open reach. Average standing crop of chlorophyll a was highest at the open site. The abundance and quality of nutritional resources in lateral habitats were reflected in the associated invertebrate communities. High densities of chironomids, early instar Ephemeroptera and Plecoptera, oligochaetes, and micro-crustacea were found in stream margins and backwaters at each site. Mean invertebrate density in lateral habitats was similar in the coniferous (66,500 individuals/m²) and open (75,000 individuals/m²) reaches, but lower at the deciduous site (24,000 individuals/m²). Collector-gatherer, shredder, and predator functional feeding groups were well represented at each site. Differences in functional roup organization between reaches were primarily related tp increased numbers of herbivorous collector-gatherers at the open site and a greater relative abundance of shredders at the deciduous site. Cutthroat trout fry populations were directly linked to the length of stream edge and the area of lateral habitat. Fry occupy lateral habitats immediately after emergence and may not move from lateral habitats until the end of their first summer. In an experimental manipulation of nine stream reaches, increasing lateral habitat prior to fry emergence resulted in 2.5 times higher fry density than in control reaches and reducing lateral habitat virtually eliminated fry populations. Cutthroat trout in headwater streams continue to use lateral habitats throughout their life cycle as refuge for all age classes during high streamflow and by adult trout as spawning areas.