<p>The coastal region of eastern Uruguay has a native and endangered ecosystem with <i>Butia</i> palms called <i>butiazais</i>. In order to find out about the formation of this vegetation, a multi-proxy study was done to analyse two sedimentary cores from this region, at Laguna de Castillos and Laguna Negra. Radiocarbon dating indicates that the analysed sediments were deposited over the last 12,000 years. The phytoliths, charcoal, sediments and geochemistry were studied to reconstruct environmental dynamics, showing the main geomorphological, climatic and ecological changes. The data suggest a complex interaction between the climate, sea level changes, vegetation dynamics and fires. At the Pleistocene–Holocene transition the climate was cold and wet, and trees and palms expanded accompanied by limited local fires with some evidence of regional fires. The temperature and precipitation increased in the early to mid-Holocene, coinciding with the Post-Glacial Marine Transgression (PMT) that led to a reduction in trees and <i>Butia</i> palms due to edaphic changes. Fire activity during this period suggests an interplay between vegetation changes and climate. In the late Holocene there was a change from C₃ to C₄ plants indicated by isotope data, with increased fire activity from natural and human causes. The expansion of grasslands probably led to fire-prone conditions, even with a wetter climate. The results provide new insights into the response of coastal ecosystems to past climatic events, with implications for predicting future environmental responses to ongoing climate change.</p>