Interdune deposits in the Navajo Sandstone of Arizona are identified as the source of most fossils known from the formation. They provide information on terrestrial life in a poorly known interval of the North American Jurassic. The biota includes sphenophytes, ostracodes, and four species of vertebrates, including a skeleton of the geologically youngest tritylodontid synapsid from western North America. Fossils and sedimentary rock localized in interdunes indicate areas of greater available moisture, and therefore greater carrying capacity, than surrounding dune deposits that compose the bulk of the formation. Environmental conditions in interdunes favor fossil preservation and thus provide a focus for future studies. The diversity and adaptations of fossils from Navajo interdunes support models of climatic amelioration during sand-sea evolution when wet interdunes were deposited.