Freshwater habitats are of high conservation value and provide a wide range of ecosystem services. Effective management requires regular monitoring. However, conventional methods based on direct observation or specimen collection are so invasive, expensive and labour-intensive that frequent monitoring is uncommon. Here, we test whether the evaluation of environmental DNA (eDNA) from water based on a simple protocol can be used for assessing biodiversity. We use universal metazoan primers for characterizing water eDNA across horizontal and vertical spatial dimensions in two reservoirs with known species diversity for two key taxa. eDNA obtained directly from 42 samples × 15 ml water (total = 630 ml) per reservoir yielded DNA signatures for more than 500 metazoan species, of which 105 could be identified to species/genus based on DNA barcodes. We show that eDNA can be used to assign each water sample to its reservoir of origin, and that eDNA outperforms conventional survey methods in single-sample richness comparisons, while revealing evidence for hundreds of unknown species that are undetected by conventional bioassessment methods. eDNA also confirms the presence of a recently discovered invasive snail species and provides evidence for the continued survival of a rare native species of goby not sighted in that habitat since 2007. eDNA thus promises to be a useful addition to the bioassessment toolbox for freshwater systems.