Dissolved organic matter (DOM) in freshwaters is recognised as a significant and active component of the global carbon budget. DOM exported from terrestrial ecosystems may be compositionally and functionally altered by chemical and biological reactions as it is transported downstream. The processes affecting DOM in headwater streams remain uncertain but are potentially highly variable depending on DOM composition and nutrient availability as a function of soils, land-use, and human pressures. To investigate variability of DOM reactivity we took water samples from two contrasting headwater catchments, considered functional ‘end-members’ for DOM export: one rich in aromatic DOM and low in inorganic nutrients (peatland), and another (nearby) catchment characterized by less aromatic DOM and high nutrient loadings (agricultural grassland). Under controlled laboratory conditions, we evaluated the effects of light, presence/absence of aquatic biota and nutrient enrichment on short-term changes in DOM quantity and quality in these samples. For the peat stream, exposure to sunlight (with UV) resulted in net abiotic DOM removal, whereas in the agricultural stream it led to net biological DOM production. Nutrient addition accelerated DOM production in both streams. We conclude that in-stream changes in DOM quantity and quality represent the net effect of multiple consumption and production processes whose relative importance is strongly influenced by source-dependent DOM composition and environmental factors such as inorganic nutrient content and sunlight exposure. Our findings suggest that headwater streams may be more active processors of carbon and nutrients than presumed hitherto.