Freshwater ecosystems represent hotspots for the world’s total diversity and human well-being. However, they are also subjected to threats across the globe as a result of localised human activities, broad scale catchment clearance, climate change and invasive species. The increased degradation of freshwater habitats and their ecological functions as a consequence of these threats, at local and global scales, has led to significant freshwater problems for human existence and the world’s biodiversity. There is growing evidence that the loss of biodiversity is one of the most complex environmental issues facing the world; however, the importance of understanding species distribution patterns and the ecological differentiation among species that are reflected as species-specific responses or tolerances to environmental drivers is less well understood. In particular, when a morphological approach is used as a taxonomic tool for investigating species diversity and species level responses to environmental drivers, the diversity of responses hidden within species complexes may not be realized, and the conclusion of generality may mask specific cryptic species responses. In South-East Queensland, Australia, European occupation since the mid 1800’s has seen large scale clearing of native vegetation along streams and rivers in nearly all catchments. As a consequence of this land-use change catchment hydrology has been substantially altered, which, combined with the presence of dams and weirs, has resulted in a decline in water quality of streams in some catchments, which is of growing concern for conservation of species biodiversity. This study aimed to explore cryptic diversity in two species complexes of freshwater aytid shrimps common in South-East Queensland and elucidate species level responses to environmental variation that could explain their spatial distribution. This broad aim was met through three specific studies. First, using regional scale data of cryptic species diversity and water quality, the importance of species-specific responses to environmental conditions in determining spatial distribution patterns and environmental relationships of cryptic species in the Caridina indistincta and Paratya australiensis species complexes was examined. To accomplish this aim, DNA sequences were used to identify shrimp specimens from 89 sites in 17 catchments spanning the study area. In addition, an assessment of eight morphological traits was used to test whether these cryptic species could be morphologically identified. Use of these eight traits did allow species level identification, at least in South-East Queensland. However, caution is suggested in the use of these morphological traits for recognising species, due to the probability of morphological plasticity within a species across broad spatial scales. Ordination analysis of presence-absence data showed that the five cryptic species within the two species complexes showed spatially distinct distributions across streams in SEQ, with each cryptic species displaying different relationships with individual environmental variables. For species in the Caridina indistincta complex, C. indistincta sp. B was significantly associated with elevation, C. indistincta sp. D was significantly correlated with dissolved oxygen range, whilst, individuals of C. indistincta sp. A were negatively associated with elevation and dissolved oxygen range. This may indicate that C. indistincta sp. A tended to inhabit sites with low elevation and perhaps having a higher tolerance to a low range of dissolved oxygen. For the Paratya australiensis species complex, P. australiensis lineage 4 and 6 showed significant correlations with elevation and conductivity, respectively. The second broad aim of the study was to explore these spatial patterns at smaller geographical scales and with greater detail about water quality to understand and quantify the fundamental environmental factors (e.g., physical chemical water parameters and concentrations of heavy metals) that are potentially shaping the current distribution patterns and abundance of cryptic species within the two species complexes. To explore this aim, sediment samples from 22 sites in 13 catchments in SEQ were analysed to determine concentrations (mg/kg dry weight) of 11 heavy metals. Additionally, a number of water quality variables were measured in situ, including: elevation, stream width, stream temperature, dissolved oxygen, conductivity, pH, total dissolved solids, and turbidity. Also, a water sample was taken from each site for laboratory analysis of: Ammonium nitrogen (NH4-N), Dissolved oxidized nitrogen (Nitrate+Nitrite) (NOX-N), Total nitrogen (TN), Total kjeldahl nitrogen (TKN), Total kjeldahl phosphorus (TKP), Orthophosphate-P (PO4-P). Shrimps were collected from each site and identified to species using both morphology and DNA sequencing. The morphological identification of each adult individual (except juveniles which were genetically analysed) was used as a measure of absolute abundance and the genetic ‘checking’ of a set number of individuals in each sample was used to compute relative abundance. Redundancy analysis (RDA) showed that the spatial distribution and absolute and relative abundance of C. indistincta sp. D and sp. B were significantly positively influenced by elevation, while the relative abundance of P. australiensis Lin.6 was significantly positively affected by the concentration of manganese (Mn). Stream Total nitrogen (TN) was significantly positive driver of the spatial distribution and relative abundance of C. indistincta sp. A, while Orthophosphate-P (PO4-P) was significantly positive driver for the absolute and relative abundance of this species. Further analysis, this study confirms that P. australiensis Lin.6 was more tolerant of heavy metal concentrations compared with other cryptic species, as its distribution and absolute and relative abundance were significantly positively correlated with the concentrations of manganese, iron and cobalt. In contrast, C. indistincta sp. A was more sensitive to these metals than other study species. These results demonstrated that cryptic species of freshwater atyid shrimps of the C. indistincta and P. australiensis species complexes were different in their environmental requirements. As well, the cryptic species of both complexes were identified to have different associations with heavy metal concentrations, indicating that these species were different in their tolerance to toxicants. Finally, the third aim of the study was to further examine the differences in sensitivity to heavy metals (Copper and Zinc) among cryptic species of the two study complexes experimentally in the laboratory. Two cryptic species of each complex were used as study species, C. indistincta sp. A and sp. D and P. australiensis Lin.4 and Lin.6. The field studies showed differences among these species in their correlations with metal concentrations, and therefore they were seen as good candidate species for testing differences in the sensitivity to metal toxicants. Each cryptic species was exposed to six concentrations of each metal Cu or Zn using an acute (96-h) toxicity test. The results from this study were generally showed contrasting correlation between species and heavy metals; P. australiensis Lin.6 was the most tolerant species to both study metals, while C. indistincta sp. A was more sensitive to copper, and C. indistincta sp. D was more sensitive to Zn compared with the other tested species. Furthermore, the exposure of individuals of each species to the heavy metals caused changes in both their behaviour and their colour during exposure time. Overall, this study has shown cryptic species within broad species complexes can vary in their spatial distribution and their tolerance and response to water quality parameters. This highlights the advantage of using analyses of biotic and abiotic variables for ecological management and biodiversity conservation and the need to understand true species diversity when looking at species level responses to environmental degradation.