Stream restoration using a variety of channel habitat improvement techniques are predominantly reach based. Although this reach focus is appropriate in natural streams in largely undisturbed watersheds, when channel modification is pervasive, as in urban watersheds, a reach based approach may lead to a patchwork of inadequate or the inappropriate application of best management practices. In urban settings it is particularly important to understand watershed potential as a part of the selection of best management practices for stream restoration. This paper reviews the development of methods to integrate hydraulic, hydrological, geomorphological, and ecological information to assess the potential for naturalization in urban watersheds. We use indicators of hydraulic variability as a surrogate for habitat and develop procedures to relate characteristics of hydraulic variability to restoration needs in a watershed.