Diatom-based carbon and oxygen isotope analyses (δ13Cdiatom and δ18Odiatom) were performed on diatom-rich laminated sediments of Lake Chungará (Andean Altiplano, northern Chile) deposited during the Lateglacial and Early Holocene (12,400–8300 cal years BP) to reconstruct climate change and environmental response across this major climate transition. The δ13Cdiatom data show both centennial-to-millennial scale changes related to fluctuations in lake productivity and CO2 concentration in the lake water, and variations in carbon sources to the lake through time. The δ18Odiatom data reflect changes in lake hydrology and climate. The combination of δ13Cdiatom and δ18Odiatom data reveals interactions between the internal lake processes and its catchment runoff. During wet periods (low δ18Odiatom values) δ13Cdiatom indicates an enhanced contribution of allochthonous carbon, whereas during dry periods (high δ18Odiatom) δ13Cdiatom values suggest more autochthonous carbon production and recycling. These decadal-to-centennial oscillations are not recognized after 10,000 cal years BP, possibly as a result of ENSO-like phenomenon weakening. Humid conditions during the Lateglacial–Early Holocene transition (12,400–10,100 cal years BP) were possibly due to the establishment of La Niña-like conditions in the tropical South Pacific. Whereas, dry conditions in the Early Holocene (10,100–9100 cal years BP) may be caused by the northward migration of the ITCZ due to both ENSO-like weakening and an insolation minimum. Finally, a return to humid conditions at the end of the Early Holocene (9100–8300 cal years BP) is coincident with an increase in summer insolation.