We examined how beaver dams affect key ecosystem processes, including pattern and process of sediment deposition, the composition and spatial pattern of vegetation, and nutrient loading and processing. We provide new evidence for the formation of heterogeneous beaver meadows on riverine system floodplains and terraces where dynamic flows are capable of breaching in‐channel beaver dams. Our data show a 1.7‐m high beaver dam triggered overbank flooding that drowned vegetation in areas deeply flooded, deposited nutrient‐rich sediment in a spatially heterogeneous pattern on the floodplain and terrace, and scoured soils in other areas. The site quickly de‐watered following the dam breach by high stream flows, protecting the deposited sediment from future re‐mobilization by overbank floods. Bare sediment either exposed by scouring or deposited by the beaver flood was quickly colonized by a spatially heterogeneous plant community, forming a beaver meadow. Many willow and some aspen seedlings established in the more heavily disturbed areas, suggesting the site may succeed to a willow carr plant community suitable for future beaver re‐occupation. We expand existing theory beyond the beaver pond to include terraces within valleys. This more fully explains how beavers can help drive the formation of alluvial valleys and their complex vegetation patterns as was first postulated by Ruedemann and Schoonmaker in 1938.