A high-resolution pollen and Pediastrum record, spanning 12,500 yr, is presented for Lake Bayanchagan , southern Inner Mongolia. Individual pollen taxa (PT-MAT) and the PFT affinity scores (PFT-MAT) were used for quantitative climatic reconstruction from pollen and algal data. Both techniques indicate that a cold and dry climate, similar to that of today, prevailed before 10,500 cal yr B.P. The wettest climate occurred between ∼10,500 and 6500 cal yr B.P., at which time annual precipitation was up to 30–60% higher than today. The early Holocene increases in temperature and precipitation occurred simultaneously, but mid-Holocene cooling started at approximately 8000 cal yr B.P., 1500 yr earlier than the drying. Vegetation reconstruction was based on the objective assignment of pollen taxa to the plant functional type. The results suggest that this region was dominated by steppe vegetation throughout the Holocene, except for the period ∼9200 to ∼6700 cal yr B.P., when forest patches were relatively common. Inner Mongolia is situated at the limit of the present East Asian monsoon and patterns of vegetation and climate changes in that region during the Holocene probably reflect fluctuations in the monsoon's response to solar insolation variations. The early to middle Holocene monsoon undoubtedly extended to more northern latitudes than at present.