In Central Yakutia (Siberia) livelihoods of local communities depend on alaas (thermokarst depression) landscapes and the lakes within. Development and dynamics of these alaas lakes are closely connected to climate change, permafrost thawing, catchment conditions, and land use. To reconstruct lake development throughout the Holocene we analyze sedimentary ancient DNA (sedaDNA) and biogeochemistry from a sediment core from Lake Satagay, spanning the last c. 10,800 calibrated years before present (cal yrs BP). SedaDNA of diatoms and macrophytes and microfossil diatom analysis reveal lake formation earlier than 10,700 cal yrs BP. The sedaDNA approach detected 42 amplicon sequence variants (ASVs) of diatom taxa, one ASV of Eustigmatophyceae (Nannochloropsis), and 12 ASVs of macrophytes. We relate diatom and macrophyte community changes to climate-driven shifts in water level and mineral and organic input, which result in variable water conductivity, in-lake productivity, and sediment deposition. We detect a higher lake level and water conductivity in the Early Holocene (c. 10,700–7000 cal yrs BP) compared to other periods, supported by the dominance of Stephanodiscus sp. and Stuckenia pectinata. Further climate warming towards the Mid-Holocene (7000–4700 cal yrs BP) led to a shallowing of Lake Satagay, an increase of the submerged macrophyte Ceratophyllum, and a decline of planktonic diatoms. In the Late Holocene (c. 4700 cal yrs BP–present) stable shallow water conditions are confirmed by small fragilarioid and staurosiroid diatoms dominating the lake. Lake Satagay has not yet reached the final stage of alaas development, but satellite imagery shows an intensification of anthropogenic land use, which in combination with future warming will likely result in a rapid desiccation of the lake.