The terminus of a stream flowing into a larger river, pond, lake, or reservoir is referred to as the stream-mouth reach or simply the stream mouth. The terminus is often characterized by rapidly changing thermal and hydraulic conditions that result in abrupt shifts in surface water/groundwater (sw/gw) exchange patterns, creating the potential for unique biogeochemical processes and ecosystems. Worldwide shoreline development is changing stream-lake interfaces through channelization of stream mouths, i.e., channel straightening and bank stabilization to prevent natural meandering at the shoreline. In the central Sierra Nevada (USA), Lake Tahoe's shoreline has an abundance of both “unmodified” (i.e., not engineered though potentially impacted by broader watershed engineering) and channelized stream mouths. Two representative stream mouths along the lake's north shore, one channelized and one unmodified, were selected to compare and contrast water and heat exchanges. Hydraulic and thermal properties were monitored during separate campaigns in September 2012 and 2013 and sw/gw exchanges were estimated within the stream mouth-shoreline continuum. Heat-flow and water-flow patterns indicated clear differences in the channelized versus the unmodified stream mouth. For the channelized stream mouth, relatively modulated, cool-temperature, low-velocity longitudinal streambed flows discharged offshore beneath warmer buoyant lakeshore water. In contrast, a seasonal barrier bar formed across the unmodified stream mouth, creating higher-velocity subsurface flow paths and higher diurnal temperature variations relative to shoreline water. As a consequence, channelization altered sw/gw exchanges potentially altering biogeochemical processing and ecological systems in and near the stream mouth.