The upper Iskar sub-catchment is one of Bulgaria’s most important economic and socially significant water sources because of its role in supplying Sofia with drinking water. Among the critical factors that carry potential high-risk levels for water quality in this hydrosystem are the discharge from the Samokov Wastewater Treatment Plant (WWTP), diffuse pollution from agriculture, and the percolation of untreated sewage from the small villages. In this study, we assessed the effect of treated wastewater effluent on water quality, and on the ecological state and microbial communities in the river sector of Samokov’s WWTP discharge area. The assessment was based on the complex use of chemical and microbiological indicators and biological quality elements. The concentrations of organics, nutrients and microcomponents were determined with results confirming the expected increase for parameters associated with the discharge of urban wastewater. The ecological state, according to macrozoobenthos indicators, was “good” throughout the river sector but local deterioration was registered in a proximal location downstream of the WWTP outfall. The analysis of stream water and bed sediment microbial communities by a fluorescent technique showed the high metabolic activity and intensive transformation processes in addition to high abundance registered with standard cultivation methods. The importance of the studied sub-catchment for the functioning of the urban water cycle, and for the quality of Sofia’s drinking water, underlines the need to extend an existing monitoring program with a more detailed assessment of the environmental impact of wastewater discharge.