Afforestation of natural grasslands with fast-growing Eucalyptus species is increasing in areas of central South America. In order to investigate the biogeochemical effects of this trend, we sampled soils and stream water in seven paired watersheds in Uruguay. We anticipated that plantation forestry would result in decreased soil pH and soil base cation concentrations due to base cation uptake by trees. In some, but not all paired watersheds, pH and exchangeable base cations were lower in afforested soils compared to grassland soils. These changes were reflected in streamwater chemistry. In most streams draining afforested watersheds, pH, base cation concentrations and alkalinities were significantly lower compared to streams draining grassland watersheds. Our data suggest that repeated cycles of harvesting and replanting has negatively impacted the soil store of base cations at these sites, and contributed to an impairment of downstream water quality.