“River Health” is the final work target of environmental protection on river ecosystem. Upstream is the source reach of a river, and upstream protection and recovery is very important to main reach of the river. A river health case study was conducted in the upstream of Tiaoxi River, in the hilly region of Zhejiang Province. This research has a great significance both on the eco-city construction of Lin’an City, and on river health assessment of the whole Tiaoxi River. The water chemistry, biology composition and sediment microorganism in river were investigated. Methods such as historical data collection, field survey, sampling on sites and analysis in the laboratory were conducted. Then, river health condition of Tiaoxi Lin’an stream was assessed by referring to the river health assessment methods developed by international researchers. Lin’an reach of Tiaoxi River is a typical highland stream. Its catchment belongs to subtropical monsoon climate zone, which is characteristic with mild climate, and abundant rainfall fallen with high temperature in summer. Water quality of Tiaoxi Stream is generally in a good condition and Jinxi River is polluted nitrogen is the major pollutant. Biodiversity of Tiaoxi Lin’an Stream showed a good statement. Invertebrates were found with a category number of 188, with trichoptera and diptera as the dominant species; benthic algaes were found with a category number of 160, with diatoms as the dominant species. Category numbers of invertebrates on sample sites were found to have positive relations with water quality, while the biomasses were found to have negative relations with water quality. Category numbers of benthic algaes on sample sites had not been found to have relations with water quality, but the biomasses were found to have negative relations with water quality. Ammonia-oxidizing archaea (AOA) was found greater differences in different sample sites than ammonia-oxidizing bacteria (AOB). All the amoA genes are divided into 26 OTUs, and located in both water column and soil column of Phylogenetic tree. amoA genes in soil column are the basic type. It was found that abundance of AOA in spring were high than that in summer and abundance of ammonia-oxidizing microbes in vegetated sediments were high than that in unvegetated areas. Based on informations of hydrology, fluvial geomorphology, riparian areas, water quality and biological communities, a river health assessment method was developed for Tiaoxi Lin’an Stream. The health condition of the river was divided into five degrees, including very healthy, fair healthy, middle healthy, less healthy and poor. Results of river health assessment on Apirl 23ed, 2010 showed that the condition of 9 sample sites distributed from fair healthy to less healthy, health condition of very healthy and poor did not exist in Tiaoxi Lin’an Streams. Assessment of river health should consider historical conditons as reference. By that way, the manangers can see the changes of river ecosystem, evaluate the restoration efforts and compare different rivers. Both environmental degradation and restoration are the long-term processes, are different for different rivers. The work should not only be in the river bed itself, but also in the catchment management and pollution control. River health should be mentioned from sources.