Urbanization changes water balance, degrades water quality and disrupts habitats. Wetlands offer storm water volume and flow control, water pollution mitigation, and rich land-water interphase habitats. In the present case study, urban wetlands were designed and implemented to provide multiple functions, including water quality improvement and the establishment of critically endangered clay stream habitat, along a revived urban stream within the Baltic Sea watershed in Southern Finland. The primary water quality concern in the recipient lake is algal bloom controlling and clay particle-carried phosphorus. Wetlands were monitored for functioning over five calendar years. At a wetland monitored for 5 years, herbaceous vegetation was well self-established in the second year, and reached 102 species, of which 97% were native, in the fifth growing season. Successful breeding of amphibians and water birds occurred right after construction. Continuous water quality monitoring over the fourth year at this wetland, with 0.1% area of its watershed, revealed seasonal and event-based differences: for total phosphorus, an annual 10% average with lower removal rates outside, and up to 71% event reductions during the growing season, while highest load reductions occurred during heavy rain and snowmelt events outside the growing season. The created wetlands provided critical habitat and beneficial functions and thus compensated partly for urbanization.