Anthropogenic activities, such as land use and land cover modifications in riparian areas, can alter the degree of fragmentation of riparian vegetation, lead to the degradation of stream habitats, and affect biological communities in the streams. The characteristics of the riparian forests can modify the condition of stream environments and the transporting mechanisms of materials, sediments, nutrients, and pollutants loaded from the watersheds. This study aimed to examine the relationships between forest fragmentation and three biological indicators of trophic diatom, benthic macroinvertebrate, and the fish assessment in the Nakdong River, Korea. Eighty-nine biological assessment sampling sites in the National Aquatic Ecological Monitoring Program of South Korea were identified. For each sampling site, riparian forest data within a 500 m radius were extracted from national LULC using GIS to compute fragmentation metrics using FRAGSTATS software. Four fragmentation metrics—number of forest patches, percentage of riparian forest cover (PLAND), largest riparian forest patch index (LPI), and riparian forest division index (DIVISION)—were correlated with the biological indicators. Also, due to severe spatial autocorrelation among observations, the fragmentation metrics and stream environmental variables were regressed to biological indicators using regression tree analysis. Our results indicate that the biological indicators were significantly associated with most forest fragmentation metrics. We found positive correlations of PLAND and LPI with biological indicators, whereas DIVISION was negatively correlated with biological indicators. Both correlation and regression tree analyses revealed that the biological conditions of streams were likely to be better if riparian forests are less fragmented. Particularly, stronger relationships were revealed between macroinvertebrates and fish with the fragmentation metrics of riparian forests than with benthic diatoms. However, these relationships varied with elevation, stream size, and slope conditions. The results of this study reinforced the importance of including riparian forests in the planning, restoration, and management of stream environments. These results also suggested that planners and managers may need to consider different strategies for different stream environments and topographic characteristics in managing riparian forests.