Modern seasonal and inter-annual precipitation variability in Palau is linked to both meridional movement of the Intertropical Convergence Zone (ITCZ) and changes in the Pacific Walker Circulation (PWC) associated with the El Niño–Southern Oscillation. Thus, Palau’s hydroclimate should be sensitive to mean shifts in the ITCZ and PWC on decadal to centennial time scales. Using compound-specific hydrogen isotope ratios (δ2H) of dinosterol in lake sediments, we generated a decadal-resolution proxy record of hydroclimatic variability in Palau spanning the past 800 yr. Results indicate a drying trend during the Little Ice Age in Palau, consistent with a southward displacement of the ITCZ. In addition to the secular drying trend, there are persistent large (∼20‰) multi-decadal to centennial oscillations in the δ2H record, the most recent of which indicates an abrupt shift to drier conditions in the mid-1970s that coincides with a decadal-scale negative shift in the Southern Oscillation Index.