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A huge proportion of the world’s population resides in urban areas along the coast. As cities expand, the ability of coastal ecosystems to provide the benefits people derive from nature, ranging from food from fisheries to coastal defense to maritime transportation and beyond, is in question. While it is well understood that coastal development changes ecosystems, quantitative insights about how terrestrial urbanization fundamentally alters ecosystem structure and function in adjacent freshwater and downstream coastal marine habitats remain rare, though a general expectation is that impacts of terrestrial urbanization will attenuate from land to freshwater to coastal marine habitats. Empirical assessments of these phenomena are especially important for species that rely on freshwater and coastal marine habitats at multiple points in their life cycles, including endangered and threatened Pacific salmon (Oncorhynchus spp.). We investigated associations between landscape-scale urbanization and ecosystem structure (biodiversity of epibenthic invertebrate taxa) and function (benthic net primary productivity and decomposition) in freshwater and coastal marine habitats across six pairs of more and less urbanized, coastal watersheds in Puget Sound, WA, USA, using principal components analysis, analysis of covariance, and Mantel tests. Greater upland urbanization was associated with greater reductions in freshwater biodiversity, measured as the density and evenness of epibenthic invertebrate families. In contrast and surprisingly, however, coastal marine biodiversity (measured as the density and evenness of epibenthic invertebrate families) tended to be higher at more urbanized sites, suggesting the potential role of low to moderate levels of urbanization-related disturbance in determining coastal marine biodiversity patterns. We found no statistical association between urbanization and freshwater and coastal marine ecosystem functions, estimated from changes in accumulated algal biomass on tiles (benthic net primary productivity) and loss of biomass from litter bags (decomposition). In addition, there was no evidence that changes in ecosystem structure and function with urbanization were more severe in freshwater than coastal marine habitats, as might be expected if the land-sea boundary diminished effects of landscape-scale urbanization. Our results suggest that the effects of urbanization can be complex and that attention to terrestrial, freshwater, and coastal marine systems in concert will produce more effective, ecosystem-based management.