This study examines the current framework for diagnosing the causes of stream ecosystem impairment in South Korea and proposes strategies to improve the effectiveness of aquatic ecosystem restoration policies. While technical guidelines and manuals for impairment diagnosis have been developed, they remain limited in practice due to weak legal enforceability, lack of integration with restoration planning, and insufficient coordination between related laws such as the Water Environment Conservation Act and the River Act. To address these issues, this study highlights the need for institutional reforms, including the legal establishment of a national inventory of impaired streams, the development of a comprehensive management plan, and the incorporation of diagnosis results into river planning processes. It also proposes clarifying the roles of central and local agencies to enhance administrative efficiency and reduce project fragmentation. Furthermore, the study emphasizes the potential of Nature-based Solutions (NbS) as a paradigm shift in stream restoration. The application of NbS should be linked to the results of scientific diagnosis and tailored to the specific characteristics and impairment mechanisms of each stream. By strengthening the link between diagnosis, planning, and implementation, and adopting ecosystem-based approaches such as NbS, this study aims to inform integrated policy and institutional directions for sustainable stream restoration in South Korea.