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The impact of acid rock drainage (ARD) and eutrophication on microbial communities in stream sediments above and below an abandoned mine site in the Adelaide Hills, South Australia, was quantified by PLFA analysis. Multivariate analysis of water quality parameters, including anions, soluble heavy metals, pH, and conductivity, as well as total extractable metal concentrations in sediments, produced clustering of sample sites into three distinct groups. These groups corresponded with levels of nutrient enrichment and/or concentration of pollutants associated with ARD. Total PLFA concentration, which is indicative of microbial biomass, was reduced by >70% at sites along the stream between the mine site and as far as 18 km downstream. Further downstream, however, recovery of the microbial abundance was apparent, possibly reflecting dilution effect by downstream tributaries. Total PLFA was >40% higher at, and immediately below, the mine site (0-0.1 km), compared with sites further downstream (2.5-18 km), even after accounting for differences in specific surface area of different sediment samples. The increased microbial population in the proximity of the mine source may be associated with the presence of a thriving iron-oxidizing bacteria community as a consequence of optimal conditions for these organisms while the lower microbial population further downstream corresponded with greater sediments' metal concentrations. PCA of relative abundance revealed a number of PLFAs which were most influential in discriminating between ARD-polluted sites and the rest of the sites. These PLFA included the hydroxy fatty acids: 2OH12:0, 3OH12:0, 2OH16:0; the fungal marker: 18:2omega6; the sulfate-reducing bacteria marker 10Me16:1omega7; and the saturated fatty acids 12:0, 16:0, 18:0. Partial constrained ordination revealed that the environmental parameters with the greatest bearing on the PLFA profiles included pH, soluble aluminum, total extractable iron, and zinc. The study demonstrated the successful application of PLFA analysis to rapidly assess the toxicity of ARD-affected waters and sediments and to differentiate this response from the effects of other pollutants, such as increased nutrients and salinity.