Hydrologic data were collected for four years at six sites in the Creeping Swamp watershed in eastern North Carolina in a preliminary effort to study the effects of stream channelization on the hydrology of a small watershed. A water-budget evaluation for pre-channelized conditions showed that runoff accounts for about 17 percent of the total rainfall, base runoff about 20 percent, ground-water outflow about 2 percent, and evapotranspiration about 61 percent. Channelization would have caused the greatest decline in ground-water levels nearest the stream, with the decline diminishing with increased distance from the stream. Channelization would also have resulted in a decrease in overland runoff and an increase in the amount of water reaching Creeping Swamp through the ground-water system, although the total volume of runoff would not change significantly. The water-quality characteristics of Creeping Swamp indicate that the stream is relatively free of pollution, although it is likely that channelization would increase (1) suspended-sediment loads, (2) stream temperatures, and (3) concentrations of dissolved solids, especially during low flows.