Numbers of naturally spawning sockeye salmon Oncorhynchus nerka, coho salmon O. kisutch, chinook salmon O. tshawytscha, and steelhead O. mykiss have recently declined to historic lows in the Lake Washington Watershed (LWW), a heavily populated watershed located in the Puget Sound lowlands of Washington State. A major reason for these declines is degradation of spawning, rearing, and migratory habitats by urbanization, the conversion of the landscape to residential, commercial, and industrial uses. Urbanization has altered the physical nature of stream habitats in the LWW primarily by modifying hydrologic disturbance regimes (floods have become more frequent and of greater magnitude) and riparian zones (forest cover has been eliminated). The resultant loss of large woody debris (LWD) in stream channels has been especially significant. Stream habitats have become simpler (e.g., loss of pool habitats, straighter and wider channels) and less suited for anadromous salmonids. Increases in nutrient loadings (especially phosphorus) are also a major concern because they can change the limnology and fish resources of Lake Washington and Lake Sammamish, two large lakes that are important to all anadromous salmonids that use the watershed. To increase the chances of rebuilding LWW salmon and steelhead populations, we believe that an ecosystem-based approach to protection and restoration of freshwater habitats is needed. Of primary importance is the need to direct protection and restoration efforts at large scales (e.g., watersheds) because most processes that create and maintain aquatic habitats occur at such scales. While the current basin-oriented approach is logical for stream habitat management, there is a need for agencies to more effectively coordinate management actions at a regional scale. This would help direct resources to areas where they will be most effective and help ensure that water quality in Lake Washington and Lake Sammamish is protected. We recommend that three categories of basins be established in the LWW based upon the status of their anadromous salmonid populations, the condition of their aquatic habitats, ecological integrity, and how heavily developed they are. The first category consists of those basins with the most diverse and abundant populations of salmon and steelhead, the highest quality habitat, the greatest ecological integrity, and least amount of development. A major focus of management efforts in these basins should be prevention of further ecosystem degradation. The second category consists of those basins that are lightly to moderately developed. Management priorities in these basins would be to upgrade the condition of these basins by preventing any further degradation from occurring and restoring damaged ecological processes. The third category consists of those basins that are the most heavily developed. These basins would be managed primarily to reduce their nutrient levels to help protect the water quality of Lake Washington and Lake Sammamish.