Stream restoration goals include reducing erosion and increasing hyporheic exchange to promote biogeochemical processing and improve water quality. Little is known, however, about fine particle dynamics in response to stream restoration. Fine particles (<100 μm) are exchanged with transient storage areas near and within streambeds and banks. Fine particle retention directly impacts carbon and nutrient cycling by supporting benthic and hyporheic primary production, but overaccumulation of fine particle deposits can impair metabolism by burying benthic biofilms and reducing streambed permeability. We analyzed the transport and retention of water and fine particles at both the reach and local scales in a restored urban stream, 9 years postrestoration. We injected conservative solute and fine particle tracers under summer baseflow conditions and monitored their distribution between surface water, porewaters, and storage areas (i.e., biofilms, hyporheic zones, and slow surface waters). Comparison of the results to a nearby unrestored stream demonstrate that the restored reach had 10–45 times greater exchange of fine particles with transient storage zones, but 5 times lower rate of net particle immobilization. Local-scale results showed that restoration increased fine particle exchange with short-term storage areas but did not increase long-term particle retention. Thus, the restored stream rapidly exchanged fine sediments with transient storage areas, but did not store fine sediments as efficiently as the unrestored stream. The decreased retention of particulate organic matter in the restored stream may reduce biogeochemical processes, such as denitrification, by not providing sufficient organic carbon or the surface area required for microbial colonization.