In tropical countries soil erosion is often increased due to high erodibility of geologically old and weathered soils; intensive rainfall; inappropriate soil management; removal of forest vegetation cover; and mining activities. Stream ecosystems draining agricultural or mining areas are often severely impacted by the high loads of eroded material entering the stream channel; increasing turbidity; covering instream habitat and affecting the riparian zone; and thereby modifying habitat and food web structures. The biodiversity is severely threatened by these negative effects as the aquatic and riparian fauna and flora are not adapted to cope with excessive rates of erosion and sedimentation. Eroded material may also be polluted by pesticides or heavy metals that have an aggravating effect on functions and ecosystem services. Loss of superficial material and deepening of erosion gullies impoverish the nutrient and carbon contents of the soils; and lower the water tables; causing a “lose-lose” situation for agricultural productivity and environmental integrity. Several examples show how to interrupt this vicious cycle by integrated catchment management and by combining “green” and “hard” engineering for habitat restoration. In this review; we summarize current findings on this issue from tropical countries with a focus on case studies from Suriname and Brazil.