Dam construction poses significant ecological impact, both during the initial construction phase and long after the dam is completed. The Diamer Basha Dam, situated on the River Indus in the Gilgit‐Baltistan district of Pakistan, is receiving significant attention due to the ecological consequences of the proposed and ongoing construction. The Dam is a 272‐m‐tall reservoir with a 9867.912 Mm3 (million cubic meter) capacity and will be the world's highest roller compact concrete dam. The assessment of local ecological impacts was compiled in a checklist and matrices format to discuss the impacts on the status of species diversity in the study area. Using a random sample methodology, line transects, and quadrats were employed to evaluate phytosociological properties of vegetation. The floral parameters recorded were percent cover, species richness, vegetation composition, frequency, and density. The ecological analysis included principal component analysis to compare the distributions of sustained and lost vegetation in response to water flow variables. This research showed that several plant species withstand periods of high peak flow, like Salix tetrasperma, Rumex dentatis, Trifolium resupinatum, and Polygonum. Additionally, visual observations, plot surveys, transects, and published reports were used to compile the faunal data used to determine habitat distribution. According to the analysis, immediate effects of dam construction activities such as blasting, quarrying, and traffic noise cause severe disturbances to existing biodiversity and habitats with high ecological vulnerability, and have long‐term effects on ecological integrity and environmental health in downstream and upstream habitats. The study presents the present status of biological and ecological conditions, as a baseline reference datum for a comparative analysis of the changes caused by the dam's construction.