We examined how niche position, niche breadth, biological traits and taxonomic relatedness affect interspecific variation in occupancy and abundance of two commonly-used biological indicator groups, i.e. diatoms and macroinvertebrates. We studied 291 diatom and 103 macroinvertebrate species that occupied the littoral zones of a large (305 km2) highly-connected freshwater system. We collated information on the biological traits and taxonomic relatedness of each species. Using principal coordinates analysis, we formed biological trait and taxonomic vectors describing distances between species and used the resulting vectors as predictor variables. As environmental data, we had site-specific physico-chemical variables, which were used in outlying mean index analyses to determine the niche position and niche breadth of each species. We used linear models to study if and how these two niche parameters and biological traits as well as taxonomic relatedness affected occupancy and abundance. We observed positive occupancy-abundance relationships for both diatoms and macroinvertebrates. We further found that, for both groups, occupancy was better explained by the predictor variables compared with abundance. We also observed that niche parameters, especially niche position, were the main determinants of variation in occupancy and abundance for both diatoms and macroinvertebrates. Local abundances of diatom and macroinvertebrate species were also, to a small degree, affected by biological traits or taxonomic relatedness. We further saw that the relationship between niche position and occupancy was negative, indicating that the more marginal the niche position, the rarer a species is. Our findings provide support for the use of diatoms and macroinvertebrates as ecological indicators as their occupancies and abundances were affected by niche parameters, which is not necessarily always clear in challenging study systems with high connectivity (i.e. high movement of material and species) among sites. These findings also suggest that indices using information on species’ occupancy, abundance and niche requirements are useful in environmental assessment.