Fine sediment (particles <2 mm in diameter) in stream beds has wide-ranging effects on hydraulics, geomorphology, and ecology and is a primary focus for stream quality management in many regions. We identify reach- and basin-scale factors associated with fine sediment in the beds of 83 stream reaches in the Midwestern United States using recursive partitioning of sand-bed and gravel-bed streams and a generalized linear model for the fraction of a stream bed covered by fine sediment. A water-surface gradient of 0.00075 is the best single determinant (80% correct classification) distinguishing sand-bed streams (lower gradient) from gravel-bed streams (higher gradient). In the higher gradient category, sand-bed streams generally had more variable monthly precipitation than gravel-bed streams. The fractional response model indicated that the proportion of a stream bed composed of fine sediment is related to high sediment supply and low transport capacity but also high gravel transport capacity. This result is consistent with both theory and observations that bed material can be transported indiscriminately with respect to particle size under high shear stress, which will drive the particle size distribution of bed material toward the distribution of supply. Management of fine sediment in Midwestern streams has been approached largely by focusing on sediment supply, which may be immutable in some places due to the landscape position or glacial history. Retention of coarse sediment is an alternative management approach to reduce the fraction of fine sediment in the beds of some Midwestern streams.