Isotope analyses of lake-margin rhizoliths from paleo–Lake Olduvai (ca. 1.75 Ma) form the basis of a new model proposed here for interpreting stable isotope values of phreatic rhizolith carbonates. Average δ18O and δ13C values from rhizoliths formed in transgressive lacustrine (waxy) claystones are relatively low. Low δ18O averages (−5.5‰) reflect meteoric water values consistent with increased precipitation during wet periods that would increase the outflow of fresh water from subsurface seeps and shift a brackish groundwater zone lakeward. Low δ13C averages (−4.1‰) could indicate little atmospheric exchange, high plant decay, and/or increased groundwater (low δ13C) flow. Higher averages in δ18O (−3.6‰) and δ13C (−2.0‰) occur during dry periods and lake regressions (earthy claystones), when hydraulic head is reduced, the lake recedes, and water within the wetlands is subjected to intense evaporation and gas exchange with the atmosphere. The isotope ratios of the rhizoliths from lowermost Bed II change in response to groundwater hydrology on Milankovitch time scales, but the isotopes also provide evidence of shorter-term (decadal to centennial scale) climate fluctuations. The orbitally driven climate changes are recorded faithfully by lithologic variations and stable isotope patterns.