In tropical forests many forest-dwelling non-aquatic passerines build nests by forest streams. It has been proposed that this behavior protects the nest from predators. However, this hypothesis has been rarely tested, and relevant aspects of the relationships between nesting birds and forest streams are to be studied. Firstly, it is not clear whether tropical forest understory passerines can indeed select stream banks for nest construction, as researchers often use forest streams as pathways, which could cause the false impression that nests of certain species are more frequently found near water. Secondly, it is expected that if birds select stream banks for nest construction, they will choose nest spots with characteristics that could increase nest survival. We studied nest site selection in two Atlantic Forest birds: the Blue Manakin Chiroxiphia caudata and the Star-throated Antwren Rhopias gularis. Nests were searched near and far from water, and a number of stream characteristics, including width, depth, water speed and water sound were compared between nest sites and random sites chosen upstream or downstream. Finally, we addressed whether stream variables could explain nest daily survival rate (DSR). Nests of both species were found only near or over water, and the average DSR was 0.975 for the Blue Manakin and 0.972 for the Star-throated Antwren. Our results provided support for the "aqua-phobic nest predator hypothesis", since we found a positive correlation between DSR and stream depth for the Star-throated Antwren and a negative correlation between nest distance from water and DSR for the Blue Manakin. However, stream parameters were not among the main variables explaining nest site selection along streams. This suggests that partial isolation provided by forest streams may reduce nest predation and can drive these species to use stream banks for nesting. The main predators of Blue Manakin nests were birds (80% of filmed predation events), whereas nests of Star-throated Antwren were preyed upon mostly by mammals (54.5% of the records).