Uplift of the Andean Cordillera during the Miocene and Pliocene produced large-scale changes in regional atmospheric circulation that impacted local ecosystems. The Lauca Basin (northern Chilean Altiplano) contains variably fluvial and lacustrine sedimentary sequences spanning the interval from 8.7 to 2.3 Ma. Field samples were collected from paleo-lacustrine sediments in the basin. Sediments were dated using detrital zircon geochronology on volcanic tuffs, yielding an age range between ~5.57 and 5.44 Ma. These new age constraints provided an opportunity to evaluate changes in the Lauca Basin ecosystem across this dynamic Miocene-Pliocene transition. We employed multiple proxies (lithofacies analysis, diatoms, pollen, and oxygen stable isotopes of authigenic carbonates) to interpret ancient lacustrine and terrestrial paleoenvironments. Alternations among mudstone, carbonate, and evaporitic facies indicate lake-level variability through time. The diatom assemblage is characterized by meso- to hypersaline and alkaline-tolerant taxa typical of shallow lakes. The δ18O values ranged from −8.96 to −2.22‰ indicating fluctuations in water balance. Pollen taxa in the outcrop are typical of a transitional stage between seasonal cloud forest and open grassland. Together, these proxies indicate that the Lauca paleolake sediments were deposited under a wetter-than-modern climate with high temporal variability. Our results refine previous studies in the Lauca Basin and are consistent with other regional studies suggesting that the South American summer monsoon at the Miocene-Pliocene transition was more intense than it is at present