We quantified benthic diatom diversity in streams in the Miellajokka catchment, about 200 km north of the Arctic circle in Sweden. Beta diversity among sites was related to local-scale environmental heterogeneity (occurring on the order of 1 km or less), and its magnitude was equal (S?rensen Index?=?0.62) to levels previously reported for rivers on regional environmental gradients across hundreds of kilometres of Arctic Fennoscandia. Species turnover was the dominant (77%) component of beta diversity in the Miellajokka catchment. Small, stress-tolerant taxa dominated the assemblages, and there were no clear patterns of functional class among sites. Site ordinates from non-metric dimensional scaling were most strongly correlated with flood frequency (r?=?0.83) and water temperature (r?=?0.89), which was higher in harsh tundra sites than below treeline. Additionally, site ordinates were correlated (r?=?0.83) with ecosystem-scale gross primary production ? indicative of a link between diatom diversity and ecosystem function. Our results advance understanding of patterns diatom diversity in Arctic streams by quantifying local-scale variation that is understudied in this region, and by identifying the consequences of this local-scale diversity for an ecosystem-scale process.