Nutrient-diffusing substrata (sand-agar plates) were combined with an in situ, flow-through bioassay system to experimentally separate effects of substratum and water enrichment on algal communities in a phosphorus-poor stream in northern Michigan, USA. Glass slides and both control and fertilized sand-agar substrata (N:P   16) were exposed to low ambient nutrient levels in a phosphorus-limited stream (N:P   40) and to water amended with nitrogen and phosphorus (N:P   16). Quantitative cell counts of periphyton taxa and microscopic examination of intact communities on sand-agar substrata indicated that motile biraphid diatom taxa (e.g., Navicula and Nitzschia spp.) responded to nutrients in both the water and substratum, attaining spatial dominance in the upper canopy. These upperstory taxa comprised > 50% total algal biovolume on sand-agar substrata and appeared to interfere with the response of sessile understory taxa (e.g., Achnanthes minutissima, Cocconeis placentula) to inorganic nutrient amendments to the water. Sessile taxa did respond to inorganic nutrients added to the water when growing on glass slides, where algal communities lacked a dense motile upperstory, indicating that substratum type can influence the nature of periphyton taxon response to nutrients. Periphyton community physiognomy and interactions between taxa are interrelating factors regulating algal response to nutrients from different sources. In addition, the form of phosphorus enrichment (inorganic vs. organic) influenced algal growth, physiognomy, and taxon composition. Algal response to the form of phosphorus was dependent on the source of the nutrient (water vs. substratum) and substratum type. Taxon diversity was greater on all nutrient treatments relative to controls on both substratum types. Diversity and species richness were highest on enriched substrata exposed to low ambient nutrient levels, relative to more homogeneous nutrient regimes where communities on enriched substrata were exposed to water amended with nutrients. Results indicate that nutrient spatial heterogeneity between substratum and water is a mechanism maintaining the species diversity of periphytic algae.