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Unsustainable urbanization in the Indo-Pacific continues to threaten terrestrial and aquatic ecosystems due to habitat disturbances driven by human pressures. The Marikina Watershed, one of the most critical watersheds in the Philippines, has been exposed to economic and population growth resulting in landscape modification and water quality degradation. This led to establishment of the Upper Marikina River Basin Protected Landscape (UMRBPL) to rehabilitate the watershed ecosystem. To strengthen this conservation initiative, we aimed to assess whether the establishment of UMRBPL has been effective in conservation of benthic macroinvertebrate diversity in streams of the Marikina Watershed. Sixteen streams, eight from UMRBPL and eight from adjoining unprotected areas, were monitored for benthic macroinvertebrate assemblages and their habitat environments, such as pH, water temperature, dissolved oxygen, total dissolved solids, conductivity, salinity, and canopy openness. Principal component analysis and non-metric multidimensional scaling based on the environmental variables and biological metrics, respectively, revealed that habitat quality and benthic macroinvertebrate assemblages significantly differed between the protected and unprotected streams, with the former having better environment and higher biodiversity. More precisely, protected streams have significantly higher dissolved oxygen and lower canopy openness and material loadings as compared to unprotected streams. Consequently, taxon richness was four-fold higher in protected streams while stream quality indices based on abundance of key invertebrate groups (EPT and EPTC) were ten-fold higher in protected streams, as compared to unprotected streams. This study demonstrates that freshwater protected areas play crucial roles in the conservation of stream ecosystems and biodiversity under rapid urbanization in developing countries, like the Philippines.