Study region: The Cheshmeh-Langan River is a semi-arid mountain river in Iran that has been strongly affected by Inter-Basin Water Transfer (IBWT) operations since 2005. Study focus: This study investigates the combined effects of IBWT and climatic drought on river hydrology, habitat characteristics, and fish habitat integrity. Field surveys conducted in 2022 compared environmental conditions, mesohabitat composition, and fish-habitat associations between two segments (upstream control and downstream impacted). Long-term meteorological and hydrological droughts were assessed using standardized precipitation (SPI) and streamflow drought (SDI) indices. Habitat Suitability Curves (HSCs) were developed for key native fish species across different life stages. New hydrological insights for the region: Results indicate a significant shift in the hydrological regime following IBWT operation. The coupling between precipitation and discharge weakened, with the correlation between SPI and SDI declining from r = 0.67 before water transfer to r = 0.34 afterward. Mean SDI values shifted from + 0.69 in the pre-transfer period to-0.93 post-transfer, demonstrating the emergence of a persistent, transfer-induced hydrological drought. This altered flow regime substantially changed habitat exploitation, as shown by HSCs. Capoeta pyragyi fingerlings and Oxynoemacheilus frenatus showed different habitat associations between the segments, while C. pyragyi adults used the same habitats but showed lower abundance downstream. Additionally, downstream fish assemblages exhibited clear species turnover and expansion of the non-native species Petroleuciscus esfahani, likely facilitated by IBWT.