The occurrence of lacustrine carbonates in the Allegheny Group (upper Middle Pennsylvanian) continental cyclothems of the northern Appalachian Basin has been attributed to climatic alternation of wet (coal deposition) and dry (carbonate deposition) periods. However, we present evidence from facies associations, coal and carbonate petrography, and carbonate stable isotope geochemistry for a uniformly wet climate throughout deposition of one of the earliest continental cyclothems, the Upper Freeport Formation (UFF). We propose a depositional model comprising a large wetland complex drained by an anastomosed fluvial system containing a mosaic of channels, freshwater siliciclastic and carbonate lakes, and peat bogs/swamps on a siliciclastic floodplain. Carbonate phases represent bio-induced precipitates modified by lake dynamics, and not evaporative deposits. Absence of covariant isotopic trends between δ 18O and δ 13C and a relatively small range of δ 18O values (−1.9 to −6.4% PDB), that are close to or lighter than predicted paleoprecipitation for the Pennsylvanian equatorial regions, indicate hydrologically open, short residence time lake systems, in support of our sedimentary model. Combined sedimentologic and isotopic data do not indicate reduced effective moisture (precipitation-evaporation) during intervals of limestone deposition. The UFF lakes developed in a relatively wet climate zone without significant episodic closure due to climatically induced water deficit. Lithologic patterns within the UFF cyclothem are primarily attributed to the evolution of anastomosed fluvial systems controlled by subsidence in an active foreland basin rather than to short-term climatic change or eustacy.