Air temperature lapse rates vary geographically and temporally. Sub-Antarctic Macquarie Island provides an opportunity to compare lapse rates between windward and leeward slopes in a hyper-oceanic climate. Lapse rates were steep by global standards, typically close to the dry adiabatic lapse rate despite the near-constant high humidity. Limited diurnal and seasonal variation occurs in lapse rates on Macquarie Island. High variability of lapse rates on the eastern (lee) slope in summer months and in the midday hours appears to be driven by solar radiation. No diurnal or seasonal pattern was evident on the western slope. Development of orographic cloud is expected to modify lapse rates, given the theoretical shift between dry and saturated adiabatic lapse rates that occurs with condensation of water vapour. Cloud cover was frequent, with higher elevations being under cloud 50% of the time, with no seasonal variation. However, cloud base level did not explain variation in lapse rates. Low cloud is likely to be of ecological importance because it influences fog precipitation, solar radiation and evapotranspiration. Year-round dominance of westerly airflows and limited seasonal variation in air temperature and humidity explain the limited seasonal variation in cloud cover and lapse rates on Macquarie Island.