Water diversion for hydroelectric power generation impacts the temperature of mountain streams. Such changes are estimated by using a coupled one-dimensional dead-zone heat balance model. In very steep river sections, the dissipation of kinetic energy is the dominant heat source. For such streams, water diversion has only a minor effect on water temperature, because dissipation-induced temperature changes are independent of discharge. In contrast, in river sections of gradual slope, the influence by solar radiation, long-wave radiation. and heat exchange with the streambed is stronger. In such cases, a discharge reduction can lead to significant temperature changes. For a small stream in the southern Swiss Alps, model results show that diversion increases temperature by about 3.7 (+/-0.9)degreesC in a 21 km long river section under high solar radiation during summer. During a cold winter episode, water temperature is estimated to be about 1.8 (+/-0.8)degreesC lower compared to natural conditions. This heat balance model can also be used to simulate the effect of different measures to reduce water temperature changes in affected streams.