Thick Miocene lacustrine deposits have been identified across the Qaidam Basin on the northeast Tibetan Plateau, indicative of a relatively unified megalake then. How this megalake evolved at its final stage and associated controlling factors, e.g., global climate or tectonic uplift, remain largely elusive. Here we use the KC-1 well, drilled at the depo-center of the western Qaidam Basin, to investigate the megalake evolution over the mid- and late Miocene. A set of lipid biomarker indices, namely β-carotane/n-C36, gammacerane index, terrigenous/aquatic ratio and long-chain saturated ketone content, altogether indicate substantial lake level fluctuations, with lower lake level at the intervals of ~18–17 Ma, 13.5–11.5 Ma, 10.5–8 Ma and 7–6 Ma, and higher level at the intervals of ~17–13.5 Ma, 11.5–10.5 Ma, 8–7 Ma and 6–5 Ma, superimposed on the long-term shrinking trend. Direct comparison with existing regional and global temperature records suggests that such lake dynamics was largely associated with global climatic conditions, i.e., shrinking under relatively cool conditions and vice versa, for both its long-term evolution and secondary fluctuations. It thus appears that global climatic conditions had controlled the megalake status during the mid- and late Miocene, whereas tectonic activities then might have also contributed to its long-term gradual demise.