South Bay on the southern coast of Manitoulin Island is a fjord-like embayment connected to Lake Huron by a natural narrow gap in the bay's outer sill 6.5–14 m above the lake. A seismic profile, pollen, plant macrofossil, grain size analyses, and other sediment properties of two piston cores from a shallow outer basin of the bay document a 9 m-thick sediment section comprising rhythmically laminated clay under silty clay containing zones with small molluscan shells and marsh detritus. A sandy pebbly layer under soft silty clay mud overlies these sediments. This stratigraphy represents inundation by deep glacial Lake Algonquin followed by the shallowing Post Algonquin series of lakes, and exposure in the early Holocene by 5 Lake Stanley lowstands in the Lake Huron basin separated by 4 Lake Mattawa highstands. Overflow from South Bay in the first lowstand is thought to have eroded the outer sill gap. Marsh environments are inferred to have formed in the bay during subsequent lowstands. The Lake Mattawa highstands are attributed to outburst floods mainly from glacial Lake Agassiz. Palynological evidence of increased spruce occurrence, an apparent regional climate reversal, during the dry pine period is attributed to cold northwest winds from the Lake Superior basin and a lake effect from the Mattawa highstands in the Lake Huron basin. Lake waters transgressed South Bay following the pine period to form the Nipissing shore on Manitoulin Island. Transfer of Lake Huron basin drainage to southern outlets and continued glacioisostatic uplift of the region led to the present configuration of South Bay and Lake Huron.