River pollution has tremendously increased in the major cities of South Asia, where the rivers have become a repository for domestic, agricultural, municipal and industrial wastes. This study presents the evaluation of benthic macroinvertebrate assemblage as a means of assessing ecological status, determining different disturbance zones and identifying environmental variables and stressors that deteriorate the river ecosystem. In total, 20 sites in 36-km stretch of the main stem of the Bagmati River and 7 sites on its tributaries were selected for sampling in the post-monsoon and pre-monsoon seasons during the time period 2008–2010. The Ganga River System Biotic Score (GRSbios) index was applied to determine the ecological status. The ecological status of the different Bagmati River stretches ranged from reference, class 1 to class 5 (extremely polluted). We identified three types of disturbance zones along the river, ranging from minimally polluted to extremely polluted. A river corridor survey was conducted to identify any river stressing factors, revealing a sharp deterioration of the river from upstream to downstream with increasing concentrations of chloride and ortho-phosphate phosphorus. Effluents and Activities and Facilities were found to be the major stressing factors to the river ecosystem. The information gained should help water managers find the most time-efficient and cost-effective measures to address river degradation.