High-resolution seismic profiles, as well as sedimentological and micropaleontological analyses of three cores, are used to reconstruct the environmental and sedimentological evolution of Preservation Inlet, the southernmost New Zealand fjord. Toward the end of the last glaciation, a series of deep oligotrophic lakes, impounded by shallow sills, occupied Preservation Inlet. Glaciers filled the headwater valleys and the vegetation consisted of a sparse cover of grass, scrub, and shrubs. The principal rivers discharged into the head of these lakes forming large sandy deltas, while finely laminated clays were deposited in the distal basins. As the climate started warming ca. 18,000 yr B.P., the snowline rose and glaciers retreated. Developing forests were dominated by Metrosideros and Cyathea fringed by coastal shrubland. In the now more productive lakes, a rich freshwater fauna developed, sedimentation rates increased, and organic mud accumulated. Under rapidly rising sea level, between 9500 and ca. 8000 yr B.P., the sills enclosing the lakes were successively overtopped. Marine water intruded into the fjord basins and flooded the deltas at the head of the lakes. By 6500 yr B.P. sea level had stabilized and the fjord assumed its present condition. Shrubs decreased in abundance and forests dominated by Weinmannia and Dacrydium cupressinum then developed. A forest dominated by Nothofagus fusca spread between 2000 and 1500 yr B.P., indicating a cooler climate. In Preservation Inlet and other New Zealand fjords, eustatic sea-level rise has been greater than isostatic rebound or tectonic uplift. Coastal inundation has resulted in a transgressional sequence from a limnic to marine environment. This contrasts with fjord coasts of the northern hemisphere where isostatic rebound has produced coastal emergence, or coastal emergence followed by submergence.