We reconstructed Holocene water-level and vegetation dynamics based on pollen and plant macrofossils from a coastal lake in Upper Michigan. Our primary objective was to test the hypothesis that major fluctuations in Great Lakes water levels resulted in part from climatic changes. We also used our data to provide temporal constraints to the mid-Holocene dry period in Upper Michigan. From 9600 to 8600 cal yr B.P. a shallow, lacustrine environment characterized the Mud Lake basin. A Sphagnum-dominated wetland occupied the basin during the mid-Holocene dry period (∼8600 to 6600 cal yr B.P.). The basin flooded at 6600 cal yr B.P. as a result of rising water levels associated with the onset of the Nipissing I phase of ancestral Lake Superior. This flooding event occurred contemporaneously with a well-documented regional expansion of Tsuga. Betula pollen increased during the Nipissing II phase (4500 cal yr B.P.). Macrofossil evidence from Mud Lake suggests that Betula alleghaniensis expansion was primarily responsible for the rising Betula pollen percentages. Major regional and local vegetational changes were associated with all the major Holocene highstands of the western Great Lakes (Nipissing I, Nipissing II, and Algoma). Traditional interpretations of Great Lakes water-level history should be revised to include a major role of climate.