Land managers are often inadequately informed to make management decisions in contemporary watersheds, in which sources of impairment are simultaneously shifting due to the combined influences of land use change, rapid ongoing human population growth, and changing environmental conditions. There is, thus, a great need for effective collaborative adaptive management (CAM; or derivatives) efforts utilizing an accepted methodological approach that provides data needed to properly identify and address past, present, and future sources of impairment. The experimental watershed study design holds great promise for meeting such needs and facilitating an effective collaborative and adaptive management process. To advance understanding of natural and anthropogenic influences on sources of impairment, and to demonstrate the approach in a contemporary watershed, a nested-scale experimental watershed study design was implemented in a representative, contemporary, mixed-use watershed located in Midwestern USA. Results identify challenges associated with CAM, and how the experimental watershed approach can help to objectively elucidate causal factors, target critical source areas, and provide the science-based information needed to make informed management decisions. Results show urban/suburban development and agriculture are primary drivers of alterations to watershed hydrology, streamflow regimes, transport of multiple water quality constituents, and stream physical habitat. However, several natural processes and watershed characteristics, such as surficial geology and stream system evolution, are likely compounding observed water quality impairment and aquatic habitat degradation. Given the varied and complicated set of factors contributing to such issues in the study watershed and other contemporary watersheds, watershed restoration is likely subject to physical limitations and should be conceptualized in the context of achievable goals/objectives. Overall, results demonstrate the immense, globally transferrable value of the experimental watershed approach and coupled CAM process to address contemporary water resource management challenges.