Background Large-scale inter-basin water transfer (IBWT) projects are commonly proposed as solutions to water distribution and supply problems. These problems are likely to intensify under future population growth and climate change scenarios. Scarce data on the distribution of freshwater fishes frequently limits the ability to assess the potential implications of an IBWT project on freshwater fish communities. Because connectivity in habitat networks is expected to be critical to species' biogeography, consideration of changes in the relative isolation of riverine networks may provide a strategy for controlling impacts of IBWTs on freshwater fish communities Methods/Principal Findings Using empirical data on the current patterns of freshwater fish biodiversity for rivers of peninsular India, we show here how the spatial changes alone under an archetypal IBWT project will (1) reduce freshwater fish biodiversity system-wide, (2) alter patterns of local species richness, (3) expand distributions of widespread species throughout peninsular rivers, and (4) decrease community richness by increasing inter-basin similarity (a mechanism for the observed decrease in biodiversity). Given the complexity of the IBWT, many paths to partial or full completion of the project are possible. We evaluate two strategies for step-wise implementation of the 11 canals, based on economic or ecological considerations. We find that for each step in the project, the impacts on freshwater fish communities are sensitive to which canal is added to the network. Conclusions/Significance Importantly, ecological impacts can be reduced by associating the sequence in which canals are added to characteristics of the links, except for the case when all 11 canals are implemented simultaneously (at which point the sequence of canal addition is inconsequential). By identifying the fundamental relationship between the geometry of riverine networks and freshwater fish biodiversity, our results will aid in assessing impacts of IBWT projects and balancing ecosystem and societal demands for freshwater, even in cases where biodiversity data are limited.