The stream bed is an important habitat for many species and is crucial for ecosystem functioning. This contribution addresses the factors that determine stream bed functioning, the methodological approaches to characterize the quality of this habitat, and the options to restore it. Using the examples of endangered European freshwater mussel and fish species, the crucial substrate-dependent physicochemical variables which determine the recruitment success in those species are illustrated. Models integrating texture and substrate penetration resistance allow to characterize the exchange between open and interstitial water, which in turn determines the redox potential in the stream bed and biological responses such as egg-to-fry survival in salmonid fishes. The use of bioindication tools such as the “egg sandwich” can be useful in pre-assessment of restoration success and in the decision on priority areas of restoration. As evident from case studies in Germany, increased amounts of fine sediment in streams often result from changes in catchment management and cannot be sufficiently addressed by in-stream measures. A comparison of frequently used techniques of stream substrate restoration in Europe revealed that one of the most heavily used techniques, the loosening of substrate with an excavator, was least sustainable, additionally resulting in the strongest adverse effects on downstream habitats compared to all other techniques. This example illustrates that restoration of stream substrates primarily needs to address catchment management and restoration of environmental flows.