In the Middle Anisian, extensional tectonic movements led to the development of a small isolated carbonate platform in the middle part of the Balaton Highland, Transdanubian Range, Hungary. In the Late Illyrian, a condensed pelagic carbonate succession with phosphorite horizons was formed on the top of the already drowned platform. These strata contain an extraordinarily diverse ammonite fauna. This unit is overlain by radiolarian-rich carbonates, locally with radiolarite interbeds. We suggest that the drowning process and the post-drowning sediment deposition were controlled partly by regional factors, i.e., the onset of opening of the Neotethys Ocean, and partly by local factors such as the bottom topography and related current activity, which may also be connected with the opening of the ocean. The predominance of the radiolarian-rich sediments suggests eutrophic surface water, which may be explained by a monsoon-driven upwelling model. The segmented sea-floor topography together with the high-fertility surface water conditions may have provided favorable habitats for the ammonites, which may have adapted to various ecological conditions, leading to extreme diversification of this group. Since similar Middle to Late Anisian evolution was reported from many other units of the western Neotethys margin, regional factors such as the establishment of an extensional tectonic regime and related marginal basin formation, monsoon-driven upwelling, and related high surface water productivity seem to be of critical importance in controlling the depositional conditions.