Dispersal rates and the diversity of the regional species pool strongly affect community assembly in habitat patches. Incorporating these elements mechanistically into a model of community assembly requires adoption of a metacommunity paradigm. We developed a hierarchical model of community assembly for stream insects that incorporates regional effects (distance to and generic richness of other stream reaches) and local effects (water quality and community composition). We tested our model with a unique data set detailing changes in stream-insect community composition over 6 sampling periods across a 27-y period of watershed recovery from anthropogenic effects. α and γ richness increased greatly over the time period, whereas β richness declined strongly. Generic richness of individual stream reaches was significantly related to dispersal distance and generic richness of surrounding immigrant pools in preceding years. However, the strength of the relationship declined over time indicating that distance to potential colonists played a major role only early in community assembly. Water quality, characterized by an ordination of pH, temperature, conductivity, dissolved O₂, NO₃, NH₄, and orthophosphate, was correlated with generic richness at all time periods during the community-assembly sequence. The functional diversity (diversity of functional attributes present in an assemblage of species) of entire communities was lower than expected from random simulations in all sampling years. However, functional diversity of individual functional feeding groups varied through time and amongst themselves. Our results suggest that both deterministic and random processes are important in metacommunity assembly, and their relative strengths vary throughout the assembly process.