This paper assesses the capacity of a small (450 m2) constructed wetland in Victoria, Australia, to decrease nutrient loads generated by both background flows and storm events within the period March 1993 to January 1995. Under Australian conditions the effectiveness of wetlands in controlling diffuse pollution is influenced by extreme hydrological events which often carry a large proportion of the annual load from the catchment. The wetland retained a varying proportion of the nitrogen and phosphorus load over a range of hydrological events and seasonal conditions. The wetland also acted as a source of these nutrients on occasions. An annual nutrient budget was calculated for the period February 1994 to January 1995 by measuring all loads between and during storm events entering and leaving the wetland. The wetland ‘retained' 10 kg N yr−1 (23 g N m−2 yr−1) of nitrogen and 1.24 kg P yr−1 (2.80 g P m−2 yr−1) of phosphorus, representing 11 and 17%, respectively of the incoming nutrient loads for the budget period.Storm event size influenced the impact of the wetland on the nutrient loads generated in these events. Increasing event volumes generally resulted in decreased nutrient interception. The results of this study indicate that for significant load reduction to occur the scale of the wetland should be such that there is sufficient residence time to enable wetland processes to operate. Small strategically located wetlands high up in catchments which will have a cumulative impact on runoff generated in large storm events are likely to be more effective in intercepting nutrient loads than larger downstream structures.