Community composition in a given landscape is a complex product of the constituent species' niche requirements, geographic connectivity, environmental properties, species interactions and drift. In this study, we examined niche use of 16 cladoceran species in 81 zooplankton communities that inhabit environmentally variable sites along a strong urbanization gradient. We tested to what extent niche shifts occurred along the urbanization gradient. We also quantified to what extent niche overlap can explain co-occurrence patterns and tested whether alternative processes such as dispersal limitation or environmental heterogeneity impact co-occurrence patterns. Niche use in the study region was size-mediated, with larger species preferring nutrient-rich environments while smaller species were more specialized on distinct niche axes. Our analyses also revealed that mainly generalist species were able to establish in urban sites. While the average niche position for most species was conserved from rural to urban sites, the niches of those species occurring in both rural and urban areas remain partly unfilled in the urban populations. We observed that a relatively small proportion (13%) of species pairs co-occurred more or less often than expected by chance, but also that niche overlap was the only predictor that was strongly and significantly associated with co-occurrence scores in our study. While most of these species pairs showed evidence for a role of environmental filtering, a few common, generalist species pairs displayed segregated co-occurrence patterns and high niche overlap, suggesting a role of limiting similarity relationships as well. Our study highlights the damaging effects on biodiversity of urbanization through biotic homogenization benefitting generalist species, as well as the difficulty species may face in occupying available niche space in urbanized habitats.