The Qarun Lake in the Faiyum Oasis (Egypt) provides a unique record of Holocene environmental and climate change in an arid area largely devoid of fossil proxy records. Multiple lithological, palaeontological and geochemical proxies and 32 radiocarbon dates from the 26-m-long core FA-1 provide a time series of the lake's transformation. Our results confirm that a permanent lake appeared in the Holocene at c. 10 cal. ka BP. The finely laminated lake sediments consist of diatomite, in which diatoms and ostracods together with lower concentrations of ions indicate a freshwater environment at the end of the early and middle Holocene. This freshwater supply was closely associated with regular inflows of the Nile water during flood seasons, when the Intertropical Convergence Zone (ITCZ) migrated northwards in Africa, although it has probably never reached the Faiyum Oasis. Local rainfall, possibly connected with a northern atmospheric circulation, may have been important during winter. Several phases in the lake's evolution are recognized, represented by oscillations between deep open freshwater conditions during more humid climate and shallow fresh to brackish water during drier episodes. After a long freshwater phase, the lake setting has become more brackish since c. 6.2 cal. ka BP as indicated by diatoms and increasing contents of evaporite ions in the sediment. This clearly shows that since that time the lake has occasionally become partly desiccated. This is a result of reduced discharge of the Nile. In the late Holocene the lake was mostly brackish and then gradually turned into a saline lake. This natural process was interrupted about 2.3 cal. ka BP when a man-made canal facilitated water inflow from the Nile. The examined FA-1 core can be used as a reference age model of climate change in the Holocene and its impact on the development and decline of ancient civilizations in northeastern Africa.