Wetland carbon storage is an important and environmentally sensitive ecosystem service. Carbon burial in the floodplain lakes of the Pantanal (tropical South America) appears to have varied during the late Quaternary, but several paleolimnological studies have recorded unusually high sediment organic carbon content from ~ 7.3 to 6.0 cal kyr BP in lakes connected to the Upper Paraguay River. We conducted a multi-indicator (phytoliths, sponge spicules, and geochemistry) study of a sediment core from Lake Caceres (Bolivia), and found evidence for enhanced organic carbon burial during the middle Holocene that provides insights into the flooding history of the Upper Paraguay River. δ13Corg and C/N data suggest that organic matter deposited at that time in Lake Caceres was from macrophytes. Similar datasets from three other floodplain lakes are consistent with this finding. We suggest that enhanced carbon burial occurred when lake levels declined under relatively dry climate conditions, which increased the littoral area at the expense of open water and captured floating macrophyte islands. This study sheds new light on hydroclimate controls on carbon cycling in the Pantanal wetlands, and improves interpretations of geochemical measures on bulk organic matter in floodplain lake cores.