Sediment contamination of freshwater streams in urban areas is a recognized and growing concern. As a part of a comprehensive regional stream‐quality assessment, stream‐bed sediment was sampled from streams spanning a gradient of urban intensity in the Piedmont ecoregion of the southeastern United States. We evaluated relations between a broad suite of sediment contaminants (metals, current‐use pesticides, organochlorine pesticides, polychlorinated biphenyls, brominated diphenyl ethers, and polycyclic aromatic hydrocarbons), ambient sediment toxicity, and macroinvertebrate communities from 76 sites. Sediment toxicity was evaluated by conducting whole‐sediment laboratory toxicity testing with the amphipod Hyalella azteca (for 28 d) and the midge Chironomus dilutus (for 10 d). Approximately one‐third of the sediment samples were identified as toxic for at least one test species endpoint, although concentrations of contaminants infrequently exceeded toxicity benchmarks. Ratios of contaminant concentrations relative to their benchmarks, both individually and as summed benchmark quotients, were explored on a carbon‐normalized and a dry‐weight basis. Invertebrate taxa measures from ecological surveys tended to decline with increasing urbanization and with sediment contamination. Toxicity test endpoints were more strongly related to sediment contamination than invertebrate community measures were. Sediment chemistry and sediment toxicity provided moderate and weak, respectively, explanatory power for the similarity/dissimilarity of invertebrate communities. The results indicate that current single‐chemical sediment benchmarks may underestimate the effects from mixtures of sediment contaminants experienced by lotic invertebrates.