Woody plants are expanding into the Arctic in response to the warming climate. The impact on arctic plant communities is not well understood due to the limited knowledge about plant assembly rules. Records of past plant diversity over long time series are rare. Here, we applied sedimentary ancient DNA metabarcoding targeting the P6 loop of the chloroplast trnL gene to a sediment record from Lake Ilirney (central Chukotka, Far Eastern Russia) covering the last 28 thousand years. Our results show that forb-rich steppe-tundra and dwarf-shrub tundra dominated during the cold climate before 14 ka, while deciduous erect-shrub tundra was abundant during the warm period since 14 ka. Larix invasion during the late Holocene substantially lagged behind the likely warmest period between 10 and 6 ka, where the vegetation biomass could be highest. We reveal highest richness during 28–23 ka and a second richness peak during 13–9 ka, with both periods being accompanied by low relative abundance of shrubs. During the cold period before 14 ka, rich plant assemblages were phylogenetically clustered, suggesting low genetic divergence in the assemblages despite the great number of species. This probably originates from environmental filtering along with niche differentiation due to limited resources under harsh environmental conditions. In contrast, during the warmer period after 14 ka, rich plant assemblages were phylogenetically overdispersed. This results from a high number of species which were found to harbor high genetic divergence, likely originating from an erratic recruitment process in the course of warming. Some of our evidence may be of relevance for inferring future arctic plant assembly rules and diversity changes. By analogy to the past, we expect a lagged response of tree invasion. Plant richness might overshoot in the short term; in the long-term, however, the ongoing expansion of deciduous shrubs will eventually result in a phylogenetically more diverse community.