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Rivers are aquatic systems with a unidirectional flow. These systems are highly diverse habitats that support a great variety of organisms, which vary in shape and function, and sustain a diverse range of hydrological ecosystem services (HESs). The HESs provided by rivers varies based on complex hydro-geomorphological dynamics and their relationship with the functional processes of the basin. Land use changes in transition zones, where ecosystem functions are compromised, affect the basin, especially basins close to or on the periphery of urban areas. Such is the case for Mexico City, where 60 m3 of water is consumed per second, 30% of which is imported from outside sources. The rivers of the Magdalena–Eslava sub-basin are among the few remaining surficial water sources in Mexico City. These rivers are located in an area classified as a Soil Conservation Zone, which has been intensely managed for decades. The aims of this paper are (1) to perform a hydrological evaluation of two urban streams and identify their relationship with the provision of hydrological ecosystem services via (i) a hydraulic balance analysis, (ii) a hydro-geomorphological characterization of each stream, (iii) an estimate of present and potential hydraulic erosion, (iv) the determination of physicochemical and bacteriological parameters and (v) a description of macroinvertebrates, macroalgae and their habitats in order to (2) identify the impacts of socio-economic dynamics on the responses of this rural-urban lotic system. Our results show that water flow, forest cover and hydro-geomorphologic heterogeneity are key to sustaining ecosystem functioning, especially in the high and middle sections of the basin. The highest potential provision of water for direct use was recorded in the sub-basin’s middle section; however, the stream channels in that section have lost their natural water flow due to a water management infrastructure built to regulate flow during the rainy season. This intervention can be viewed as a regulation of HESs as water management infrastructure alters the transport of sediment and reduces available natural habitat. The provision of quality water in the lower area of the sub-basin has been seriously compromised by the establishment of illegal urban settlements. A relationship between biologically diverse ecological traits and their response capabilities was established and can be considered an indicator of current HES potential. Therefore, this sub-basin may constitute an example of good management and maximizing potential HESs in an urban-rural setting based on improved management strategies that could be applied in other developing nations.