Although stream-catchment interactions have been analysed in some detail in temperate environments, little is known about the effects of land-use changes in the tropics. Here, we analyse differences in benthic communities (macroinvertebrates and fungi) under two contrasting land uses (mature secondary forest and pasture) in montane streams in north-western Ecuador and their influence on the rates of litter processing. Between 2005 and 2006, we used a combination of coarse and fine mesh bags to study the relative contribution of macroinvertebrates and fungi to processing of two types of litter, Alnus acuminata and Inga spectabilis, in three-first-order streams running through mature secondary montane forests and adjacent downstream reaches running through pastures. At the same time, we characterised the assemblages of shreddering macroinvertebrates and fungi communities and the litter processing rates in stream reaches under both vegetation types. Litter processing rates attributable to invertebrate feeding (coarse mesh bags) were significantly slower in streams running through pastures. Nevertheless, shredder diversity and richness were similar between pasture and forest sections, while shredder abundance was significantly higher in forest streams (mainly Phylloicus sp. :Trichoptera). Fungal reproductive activity and litter processing rates were low (fine mesh bags) and did not differ significantly between pasture and forest stream reaches. Phylloicus sp. abundance was the best predictor of the percentage of litter remaining in coarse mesh bags across pasture and forest sites. Neither shredder diversity nor their species richness was a significant predictor of mass loss, as most of the decomposition was performed by a single keystone species. Although litter decomposition by microbial decomposers was low, fungal biomass (but not diversity) was the best variable explaining the percentage of litter remaining in fine mesh bags. Our data suggest that, in these Neotropical montane streams, land use can have a significant impact on the rates of critical ecosystem processes, such as litter decomposition. In this study, this effect was not mediated by a major shift in the structure of the benthos, but by a decrease in the abundance and relative representation of a single species whose life history makes it critical to litter processing. This study highlights the significant role that macroinvertebrate fauna can have in the processing of litter in Neotropical streams and the predominant role that single species can have in terms of controlling stream ecosystem-level processes. Understanding the extent to which these patterns affect the long-term and large-scale functioning of stream ecosystems still needs further research and will become increasingly important in terms of managing lotic ecosystems in the context of rapid land-use change.