We present a well-dated, high-resolution, ~ 45 kyr lake sediment record reflecting regional temperature and precipitation change in the continental interior of the Southern Hemisphere (SH) tropics of South America. The study site is Laguna La Gaiba (LLG), a large lake (95 km2) hydrologically-linked to the Pantanal, an immense, seasonally-flooded basin and the world's largest tropical wetland (135,000 km2). Lake-level changes at LLG are therefore reflective of regional precipitation. We infer past fluctuations in precipitation at this site through changes in: i) pollen-inferred extent of flood-tolerant forest; ii) relative abundance of terra firme humid tropical forest versus seasonally-dry tropical forest pollen types; and iii) proportions of deep- versus shallow-water diatoms. A probabilistic model, based on plant family and genus climatic optima, was used to generate quantitative estimates of past temperature from the fossil pollen data. Our temperature reconstruction demonstrates rising temperature (by 4 °C) at 19.5 kyr BP, synchronous with the onset of deglacial warming in the central Andes, strengthening the evidence that climatic warming in the SH tropics preceded deglacial warming in the Northern Hemisphere (NH) by at least 5 kyr. We provide unequivocal evidence that the climate at LLG was markedly drier during the last glacial period (45.0–12.2 kyr BP) than during the Holocene, contrasting with SH tropical Andean and Atlantic records that demonstrate a strengthening of the South American summer monsoon during the global Last Glacial Maximum (~ 21 kyr BP), in tune with the ~ 20 kyr precession orbital cycle. Holocene climate conditions occurred as early as 12.8–12.2 kyr BP, when increased precipitation in the Pantanal catchment caused heightened flooding and rising lake levels in LLG. In contrast to this strong geographic variation in LGM precipitation across the continent, expansion of tropical dry forest between 10 and 3 kyr BP at LLG strengthens the body of evidence for widespread early–mid Holocene drought across tropical South America.