Thermokarst lakes are a widespread feature of the Arctic tundra, in which highly dynamic processes are closely connected with current and past climate changes. We investigated late Quaternary sediment dynamics, basin and shoreline evolution, and environmental interrelations of Lake El’gene-Kyuele in the NE Siberian Arctic (latitude 71°17′N, longitude 125°34′E). The water-body displays thaw-lake characteristics cutting into both Pleistocene Ice Complex and Holocene alas sediments. Our methods are based on grain size distribution, mineralogical composition, TOC/N ratio, stable carbon isotopes and the analysis of plant macrofossils from a 3.5-m sediment profile at the modern eastern lake shore. Our results show two main sources for sediments in the lake basin: terrigenous diamicton supplied from thermokarst slopes and the lake shore, and lacustrine detritus that has mainly settled in the deep lake basin. The lake and its adjacent thermokarst basin rapidly expanded during the early Holocene. This climatically warmer than today period was characterized by forest or forest tundra vegetation composed of larches, birch trees and shrubs. Woodlands of both the HTM and the Late Pleistocene were affected by fire, which potentially triggered the initiation of thermokarst processes resulting later in lake formation and expansion. The maximum lake depth at the study site and the lowest limnic bioproductivity occurred during the longest time interval of ∼7 ka starting in the Holocene Thermal Maximum and lasting throughout the progressively cooler Neoglacial, whereas partial drainage and an extensive shift of the lake shoreline occurred ∼0.9 cal. ka BP. Correspondingly, this study discusses different climatic and environmental drivers for the dynamics of a thermokarst basin.