Climatic changes threaten freshwater resources and aquatic ecosystem health in the Sierra Nevada (California, USA), which has important consequences for millions of people and the world’s fifth largest economy. However, the timing and magnitude of ecological changes driven by hydroclimate oscillations remain poorly understood in California’s headwater region. Here, we develop a precisely dated, annually to decadally resolved lake sediment record of ecological change from the eastern Sierra Nevada that spans the last three millennia. Diatom paleoecology reveals a detailed history of abrupt limnologic transitions, best explained by modifications in water column stratification, mixing, and nutrient status in response to changing seasonality. Seasonally stratified conditions were registered during the Late Holocene Dry Period and the Medieval Climate Anomaly, illustrating the sensitivity of fossil diatoms to well-known periods of drought. Yet the most striking feature of the record is the uniqueness of ~1840–2016 CE: a period of singularly strong water column stratification, increased algal diversity, and reduced diatom productivity consistent with unprecedented “hot droughts.” The data demonstrate that hot–dry conditions of the Industrial Era altered lake state to conditions unseen in the past ~3180 years, and suggest that regional trends identified by historical monitoring began far earlier than previously recognized. Our record illustrates the profound influence of anthropogenic climate warming on high-elevation lakes and the ecosystem services they provide in the Sierra Nevada, which hold implications for water quality and availability in California.