Conserving natural vegetation cover is of critical importance for maintaining the ecological integrity and hydrological properties of large river basins (more than 100 000 km2). Recent estimates indicate that more than 700 000 km2 of Brazilian Amazon have already been deforested, and to reduce further losses and preserve the important natural and cultural resources in this region, large conservation areas have been created by the Brazilian government. The present study analysed land cover and land use change in the major watersheds of the Brazilian Amazon, in order to evaluate the current balance between deforestation and conservation of natural areas in the region. The results show that watersheds draining the southern part of the basin have suffered the highest deforestation rates, with the largest losses (8.3–20% of total basin area) occurring in the Madeira, Tapajós, Xingu, Araguaia and Tocantins river basins. Most large watersheds already have significant deforestation in their headwaters, which can affect hydrological functions and ecological sustainability. The greatest allocation of land for conservation was encountered in the Trombetas, Xingu and Negro watersheds, where conservation areas occupied 92.5, 56.9 and 50.6% of the total basin, respectively. While extensive areas of the Amazon biome have been deforested, on the scale of large watersheds there is a positive balance between conservation areas and deforestation, and on average the area delimited by conservation areas is more than three times larger than the deforested areas. An analysis by subwatersheds, however, indicates that certain regions have achieved more critical levels of deforestation, in some situations affecting more than 80% of the subwatersheds.