Linear dunes are frequently examined with regard to their formation and maintenance; however, erosion or degradation of these landforms is less commonly addressed, due in part to the lack of observable changes in the geologic record. This study investigates the significant erosion of linear dunes along Lake Caroline, a playa in the northern Simpson Desert of central Australia. Field observations, laboratory analyses, and remote sensing imagery document recent fluvial and lacustrine interactions at Lake Caroline. Compositional and geochemical sediment analyses from three ∼2 m deep hand-augured sample sites indicate that the playa is primarily filled with sand from linear dunes, but also contains evaporite minerals and weathered local bedrock. Satellite images show that the playa has flooded at least 58 times since 2001. Our results indicate that present-day aeolian processes are sufficient to mobilize and transport sediment but are dominated by fluvial-lacustrine processes, resulting in the playa-adjacent dunes becoming isolated and starved of local sediment. As a result, the dunes are currently eroding into the playa which supports the conclusion that long-distance sediment transport is not responsible for the formation or maintenance of linear dunes as suggested by the linear due extension hypothesis. Burial dates from optically stimulated luminescence (OSL) indicate the linear dunes have been eroding for as much as 24 ka, and sediment samples from the playa near one linear dune suggest an onset of dune formation in the area before 58 ka. This work documents an instance in geologic time during the late Quaternary when aeolian, fluvial, and lacustrine processes are competing with one another, offering new insights into the dynamics of linear dunes in the arid Simpson Desert.