Headwater streams and wetlands with a combination of surface and subsurface flows are common features of many upland-forested watersheds. Unlike headwater stream reaches with continuous surface flow, the hydrology and ecology of subsurface stream reaches are poorly studied and not factored into existing wetland legislation. We assessed subsurface habitats and associated biota in a 435-m reach of a first-order, intermittent stream draining a riparian zone dominated by eastern hemlock (Tsuga canadensis) in north central Massachusetts. Stream flow was found only in subsurface flowpaths beneath large boulders and surface root mats over approximately 70% of the total stream length at summer base flow. Temperature, specific conductivity, dissolved oxygen, and dissolved organic carbon concentrations of subsurface water were similar to surface water. Macroinvertebrates were found in subsurface habitats but at a lower abundance and richness per unit area compared to surface habitats. Collectors such as Chironomidae, Polycentropodidae, and Ephemerellidae were generally the most abundant families in both surface and subsurface habitats. Our findings indicate that in some glaciated watersheds, intermittent streams with no visual evidence of surface flow may contain subsurface flowpaths with water chemistry and biota comparable to coupled perennial surface flow reaches. The prevalence and importance of subsurface habitats in some headwater streams may warrant review or revision of existing state and local regulatory definitions of intermittent and headwater streams.