This study from the Sremski Karlovci clay pit in northern Serbia sheds new light on the physicochemical conditions, ecology and evolution of the Paludina Lake – the Pliocene successor of the late Miocene giant Lake Pannon hosted by the Pannonian Basin. The multidisciplinary study combines sedimentology, sequence stratigraphy, biostratigraphy, palaeontology, palaeobotany, coal petrology, organic geochemistry and magnetic mineralogy. The sedimentary succession studied represents the lake margin at the foot of the Fruška Gora ridge. Sedimentary facies reveal minor and major lake-level changes, including a forced regression with fluvial valley incision in the succession middle part and the ultimate emergence and covering of the lake floor by Pleistocene loess. Mollusc and ostracod fauna indicates an oligohaline shallow cool-water environment, no deeper than 5–6 m, with an active inflow of spring water. The lake local depth during transgression maxima did not exceed 20 m. Palynological and geochemical analyses indicate a rich and diversified assemblage of gymnosperm plants with a contribution of angiosperms, weeds and microbial biomass in the peat-forming suboxic to oxic coastal swamp environment. Maceral analysis of organic matter shows a prevalence of huminite, accompanied richly by inertinite in lignite and by liptinite in clay. The Pleistocene shift to terrestrial semiarid environment resulted in oxidizing groundwater conditions, with the reddening of sediments around a fluctuating groundwater table and the diagenetic transformation of bacteria-derived greigite into magnetite. In regional stratigraphy, the occurrence of Viviparus neumayri Brusina in the lower half of the succession indicates the Lower Paludina Beds of Dacian Stage (early Zanclean age). Other gastropods and certain ostracodes indicate transition to the Middle Paludina Beds of lower Romanian Stage (late Zanclean–early Piacenzian). The upper half of the succession lacks age-diagnostic fossils and is considered to represent Middle Paludina Beds with a possible relic of Upper Paludina Beds at the top.