Invasive species alter ecosystem structure and functioning, including impacts on native species, habitat alteration, and nutrient cycling. Among the 27 invasive plant species in Nepal, water hyacinth (Eichhornia crassipes) distribution is rapidly increasing in Lake Cluster of Pokhara Valley (LCPV) in the last several decades. We studied the effects of water hyacinth on threatened waterbird abundance, diversity, and physico-chemical parameters of water in the LCPV. We found areas with water hyacinth present (HP) had reduced threatened water bird abundance relative to areas where water hyacinth was absent (HA; p = 0.023). The occurrence of birds according to feeding guilds also varied between water hyacinth presence and absence habitats. Piscivorous birds were more abundant in HA areas than HP areas whereas insectivorous and omnivorous birds had greater abundance in HP areas than in HA areas. Threatened waterbird abundance and richness were greater in areas with greater water depth and overall bird abundance but declined in HP areas. Degraded water quality was also identified in HP areas. Our findings can be used as a baseline by lake managers and policy makers to develop strategies to remove or manage water hyacinth in LCPV to improve waterbird conservation.