Urban streams are degraded through multiple mechanisms, including severely altered flow regimes, elevated concentrations of waterborne contaminants and the loss of a mosaic of heterogeneous habitats. To counter urbanisation impacts, restoration resources are often directed at enhancing reach-scale habitat heterogeneity, because it is more tractable than management strategies requiring broader-scale actions. To assess the effect of reach-scale habitat structure on macroinvertebrates, we compared communities from urban reaches with natural substrates to those from engineered concrete channels, given that such engineering is a widespread and extreme case of habitat simplification in urban streams. The communities from all urban reaches were distinctly different from more diverse communities in forested reference streams. The structures of communities in non-engineered and engineered urban reaches were generally similar, being dominated by hardy Diptera. Despite low habitat heterogeneity, engineered channels supported very high abundances of those hardy taxa, likely owing to nutrient enrichment. The family-level richness was only slightly higher in non-engineered reaches than in engineered channels, with similarly low SIGNAL scores indicative of major ecological impairment in both urban reach types. The results add weight to the growing evidence that in urban regions the provision of increased habitat heterogeneity at reach-scales is insufficient to support diverse macroinvertebrate communities without addressing catchment-scale changes in flow regimes, water quality and connectivity.