Field observations in a wide range of environments have shown that sediment availability is a major control on the suspended sediment observations in streams. Here we examine, via laboratory experiments, how the amount of proximal in‐channel fine sediment storage relative to the upstream fine sediment distal supply influences the observations of suspended sediment concentrations in streams. Experiments under idealized conditions in a laboratory flume with different ratios of proximal and distal sediment supplies were conducted under a varying flow regime. In addition, the role of the sediment particle size of the supplied sediment on suspended sediment observations was explored. The combinations of proximal and distal sediment supply result in multiple responses of the channel bed and sediment quantity within the channel bed, and the responses adjust through aggradation and degradation. The signature of sediment concentration observed at the upstream section of the channel, given by the distal supply, differs from the downstream observations of the total conveyed sediment (distal and proximal), as shown by an in‐phase analysis of sediment concentration‐discharge plots. Furthermore, we show that nonuniform sediment mixtures may result in a change in the direction of the hysteresis observed between sediment concentration and discharge (i.e., from a clockwise hysteresis to a counterclockwise hysteresis). We also demonstrate that the ratio between sediment distal supply and proximal sediment availability modulates the magnitude of the aggradation/degradation processes in the channel reach and thus the joint observations of sediment concentration and discharge.