Swindale Beck, which flows into the River Eden near Haweswater, was straightened 200 years ago to clear land for grazing.
However, the lack of natural bends and faster flowing water meant gravel was washed away, making it less easy for Atlantic salmon and trout to spawn.
A kilometre-long channel mirroring its original course has been dug, with the water now directed into it.
The project, involving United Utilities, the RSPB, Natural England and the Environment Agency, will also alleviate flooding by slowing the flow of water through the valley.
A river in Cumbria has been restored to its natural meandering course.