Nestedness is a widely studied pattern in ecology and biogeography. Nestedness has been termed perfect when sites harbouring low-diversity assemblages contain subsets of species in progressively more diverse assemblages. Nestedness has been studied in various regional and environmental contexts, but few studies have rigorously examined environmental factors underlying this pattern. We studied the degree and determinants of nestedness in insect assemblages of headwater streams. We hypothesized that nested habitat characteristics and nested niche structure generate nestedness in these organisms and tested this hypothesis in 8 boreal drainage basins (63–70° N, 23–29° E). Stream insect assemblages were significantly nested in all 8 regions based on the nestedness temperature calculator and in 5 regions based on discrepancy analysis. Nestedness was weak, however, as suggested by high matrix temperature values. Site ranks in the maximally packed nestedness matrix were significantly correlated to stream size in 2 of the regions and to environmental gradients in 5 of the regions. Nestedness was primarily governed by stream size and local environmental gradients. The relationships of nestedness to environmental gradients suggest that, at least in some regions, stream insects show nested niche structure with regard to their responses to environmental gradients. These environmental relationships are highly region-specific, however, suggesting strong context-dependency in nested subset patterns.