Aquatic ecosystems are facing escalating threats from urbanization, habitat loss and projected impacts of climate change, which both individually and in combination have the potential to fundamentally alter ecosystem functioning. While it is well established that habitat disturbances can affect the composition and diversity of aquatic communities, only recently have studies considered whether such impacts result in changes in species’ functional traits. We consider how functional traits of freshwater and marine fishes respond to environmental change, and how shifts in the expression of these traits can impact community dynamics and key ecological processes, including trophic interactions and nutrient transfer. We find that a multitude of functional traits, including behavioural and sensory traits, is sensitive to habitat disturbances. We demonstrate how these trait changes can be used to reveal hidden “ecological diversity” as well as serving as early indicators of environmental perturbation. We conclude that management strategies that consider the fundamental biological responses of fishes to habitat disturbance will be particularly effective in determining causal relationships within the ecological network. While detailed information on trait function is often lacking, even some general understanding of trait function and importance will facilitate targeted and efficient ecosystem management. We urge fisheries biologists and aquatic ecosystem managers to consider the role of functional traits in facilitating effective habitat restoration and management.