Tropical forests are under continued threat due to deforestation and fragmentation, mainly because of clear-cutting for agriculture and cattle ranching, and it can lead to water quality degradation. However, there is a need for understanding the role of forest areas as an indicator of water quality in the current diverse landscape in tropical watersheds. Thus, this study aims at evaluating forest cover as an indicator of stream health in tropical agricultural watersheds. We selected six watersheds of low-order streams in Southeastern Brazil with different percentages of forest cover, where water samples were collected to obtain the following water quality parameters: dissolved oxygen (DO), turbidity (NTU), total suspended solids (TSS), inorganic suspended solids (ISS), organic suspended solids (OSS), total nitrogen (TN), total phosphorus (TP), total coliforms (TC), and fecal coliforms (FC). A land use/land cover (LULC) map was used to extract the LULC pattern of each watershed, and a distance metric was applied to explore the differences between them. The water quality parameters were analyzed by the yearly mean, data variation and the correlation between them. We compared forested (55% of forest cover or more) and degraded (35% or less) watersheds using MANOVA and PCA. Degraded watersheds showed high values of solids, turbidity, nutrients, and coliforms. The most forested watershed showed the best water quality, whereas the watershed mainly covered by agriculture presented the poorest water quality and the greatest temporal variation. The forested watersheds showed significant difference with degraded watersheds, which presented higher value of all the parameters, excepted of DO. NTU, solids, and TP were correlated, showing that turbidity and solids represent the particles in the water, and they carry adsorbed phosphorus. Those parameters also responded to the streamflow variation. The results indicated that the pollution came from the agricultural and residential areas, whereas the tropical forest was important to keep water clean. Thus, tropical forest cover is a good indicator of water quality, and plays an important role in minimizing the impacts of human activities on ecosystem services in agricultural watersheds. Nevertheless, better soil management practices and basic sanitation implementation are still needed to improve water quality.