The Pandeiros wetland is a tropical wetland located in the ecotone between the Cerrado and the Caatinga, in central Brazil. It has a key ecological importance for vegetation biodiversity, hydrological cycles, fauna reproduction and feeding, and for local human populations. Here, we investigate millennial-scale variability of water supply, vegetation structure and fire activity in the Pandeiros wetland during the Late Holocene and discuss forcing mechanisms that affected flooding, vegetation cover and fire regime within this fragile ecosystem. Our study is based on the previously studied pollen record of the Pandeiros palm swamp and on new charcoal analyses of two sediment cores that cover the last 4500 cal years, and their comparison to modern pollen and to available paleoclimatic data. Our results show that both local rainfall at the Pandeiros River basin and southern rainfall at the upper São Francisco River were important in maintaining water supply for the Pandeiros wetland during the last millennia. Our data also suggest that during Late Holocene the arboreal cover declined in the Cerrado of the Pandeiros Basin, an opposite trend to that observed in the wetter Cerrado-Atlantic Forest ecotone. We propose that increasing summer insolation in Southern Hemisphere was an important factor in maintaining low arboreal cover and open savanna vegetation on the drier areas around the Pandeiros wetland. Regarding fire activity, we suggest that until around 2600 cal yr BP, climate conditions were the most important driver of fire activity, in which drier conditions favored the intensification of fire, whereas subsequently, anthropic activities appear to have become an important fire inducer. Our findings highlight the multiple environmental aspects that have influenced the Pandeiros wetland history during the last four thousand years, including monsoon variability, insolation variation and human occupation.