Since the end of the 1990s the Portuguese Iberian Pyrite Belt (IPB) is a typical European post-mining region with significant problems related to acid mine drainage (AMD), metal dispersion, mine waste management and unsafe mining infra-structures. The Portuguese government is providing particular attention on the sulphide abandoned mines and doing considerable investments on the mining recovery all over the country. The former Caveira mine was closed in the 1980s. It is considered an extremely impacted site due to the dimension of the areas affected by mining activities. Tailings, mine addicts and associated waste rock dumps, resulting from 129 years of pyrite and Cu exploitation, are spread along the Grândola stream. Despite the semi-arid climatic conditions of the area, the tailings are considerably eroded by the surficial waters, particularly during rainfall events. The past mining and smelting activities have resulted in severe contamination of the Grândola stream and its tributary by AMD (pH b 2) as well as degradation of surrounding stream sediments, soils and vegetation. In order to evaluate possible environmental risks, a sediment and surface water survey was carried out downstream the Caveira mine. The acidic effluent and mixed stream water show high Al, As, Ca, Cd, Cu, Fe, Hg, Mg, Mn, Ni, Pb and SO 4 concentrations, with several of these contaminants exceeding local and/or surface water quality standards. The data show a strong seasonal variation of surface water quality with poorer water quality during the dry and rainy seasons caused by evaporation and efflorescent salt dissolution, respectively. The variable flow regime at the local streams causes dilution of AMD rich in trace metals reaching background within 14 km downstream. The potential toxicity of stream metal concentrations was determined using cumulative criterion unit (CCU) scores and the modified AMD index (MAMDI), which highlighted As, Cd, Cu, Pb and Zn as the major sources of potential chronic stream toxicity, with emphasis on winter season. Although the threshold of the likely harm to aquatic life is exceeded at all sites, the two indexes highlight differences relating to the extension of contamination effects. The Average Index of Toxicity (AIT) showed that sediment contamination is very high even when the distance to mine promoted a decreasing in water metal concentrations, which are being precipitated in the sediments due to pH increase.