This study is based on multiproxy data gained from a 14C-dated 6.5 m long sediment core and a 210Pb-dated 23 cm short core retrieved from Lake Rauchuagytgyn in Chukotka, Arctic Russia. Our main objectives are to reconstruct the environmental history and ecological development of the lake during the last 29 kyr and to investigate the main drivers behind bioproduction shifts. The methods comprise age-modeling, accumulation rate estimation, and light microscope diatom species analysis of 74 samples, as well as organic carbon, nitrogen, and mercury analysis. Diatoms have appeared in the lake since 21.8 ka cal BP and are dominated by planktonic Lindavia ocellata and L. cyclopuncta. Around the Pleistocene–Holocene boundary, other taxa including planktonic Aulacoseira, benthic fragilarioid (Staurosira), and achnanthoid species increase in their abundance. There is strong correlation between variations of diatom valve accumulation rates (DARs; mean 176.1×109 valves m2 a1), organic carbon accumulation rates (OCARs; mean 4.6 g m−2 a−1), and mercury accumulation rates (HgARs; mean 63.4 µg m−2 a−1). We discuss the environmental forcings behind shifts in diatom species and find moderate responses of key taxa to the cold glacial period, postglacial warming, the Younger Dryas, and the Holocene Thermal Maximum. The short-core data likely suggest recent change of the diatom community at the beginning of the 20th century related to human-induced warming but only little evidence of atmospheric deposition of contaminants. Significant correlation between DAR and OCAR in the Holocene interglacial indicates within-lake bioproduction represents bulk organic carbon deposited in the lake sediment. During both glacial and interglacial episodes HgAR is mainly bound to organic matter in the lake associated with biochemical substrate conditions. There were only ambiguous signs of increased HgAR during the industrialization period. We conclude that if increased short-term emissions are neglected, pristine Arctic lake systems can potentially serve as long-term CO2 and Hg sinks during warm climate episodes driven by insolation-enhanced within-lake primary productivity. Maintaining intact natural lake ecosystems should therefore be of interest to future environmental policy.