Excessive nutrient loading of water bodies is a leading cause of water pollution worldwide(1,2), and controlling nutrient levels in watersheds is a primary objective of most environmental policy(3). Over the past two decades, much research has shown that ecosystems with more species are more efficient at removing nutrients from soil and water than are ecosystems with fewer species(4-7). This has led some to suggest that conservation of biodiversity might be a useful tool for managing nutrient uptake and storage(7-10), but this suggestion has been controversial, in part because the specific biological mechanisms by which species diversity influences nutrient uptake have not been identified(10-12). Here I use a model system of stream biofilms to show that niche partitioning among species of algae can increase the uptake and storage of nitrate, a nutrient pollutant of global concern. I manipulated the number of species of algae growing in the biofilms of 150 stream mesocosms that had been set up to mimic the variety of flow habitats and disturbance regimes that are typical of natural streams. Nitrogen uptake rates, as measured by using (15)N-labelled nitrate, increased linearly with species richness and were driven by niche differences among species. As different forms of algae came to dominate each unique habitat in a stream, the more diverse communities achieved a higher biomass and greater (15)N uptake. When these niche opportunities were experimentally removed by making all of the habitats in a stream uniform, diversity did not influence nitrogen uptake, and biofilms collapsed to a single dominant species. These results provide direct evidence that communities with more species take greater advantage of the niche opportunities in an environment, and this allows diverse systems to capture a greater proportion of biologically available resources such as nitrogen. One implication is that biodiversity may help to buffer natural ecosystems against the ecological impacts of nutrient pollution.