The Miocene marine sediments of the Torquay Group in the Port Phillip Basin of southeast Australia were deposited at a paleolatitude of at least 45°S. Nevertheless, the presence of subtropical larger foraminifers, plankton of the “Orbulina” bioseries and other biofacies signals testify to a time of global warmth and correspond to the “Miocene Climatic Optimum”. Throughout the Early Miocene to early Middle Miocene, bioclastic calcarenite of the Batesford Limestone was deposited in warm, subtropical and oligotrophic marine conditions in a high-energy inner-shelf (<70 m depth) environment. During the early Middle Miocene, a distinct change in foraminiferal assemblage accompanied the transition to deposition of finer-grained marl and silty clay of the Fyansford Formation. At this level, a significant increase in the abundance of infaunal and planktonic taxa indicates a shift to a low-energy, middle- to outer-shelf environment (50–100 m depth). The disappearance of the larger subtropical foraminifera and the shift to a foraminiferal assemblage dominated by cool-water upwelling indices later in the Middle Miocene, signal the onset of oceanic upwelling and climatic cooling as identified in other southern Australian Tertiary basins. This event can be correlated to a period of global climatic cooling and intensified oceanic circulation that occurred in response to expansion of the East and West Antarctic ice sheets during the Middle to Late Miocene.