A high-resolution time series of diatoms from the Estancia Basin of central New Mexico, USA, reveals decadal to millennial changes in water chemistry during the Last Glacial Maximum (LGM) and suggests that groundwater leakage limited the size of Lake Estancia highstands. Previous work showed that the lake expanded at least five times during the LGM, with each highstand reaching the same elevation; numerical modeling experiments showed that highstands required increases in precipitation of 1.5–2 times that of modern times but also demonstrated that these conditions could have lasted for only a few decades or the lake would have overflowed the basin’s sill. The fact that the lake returned to the same elevation suggests that highstands were climatologically similar. Here we present an alternative scenario, that once the lake reached a particular threshold volume, groundwater leakage prevented further expansion, which means that precipitation increases may have been larger than previously thought. The LGM diatom sequence is dominated by freshwater planktonic species in the Lindavia ocellata complex, the freshwater to brackish littoral species Pseudostaurosira brevistriata, and the brackish to saline benthic species Diploneis cf. smithii, all of which show decadal to centennial oscillations that were likely driven by solar cycles. Canonical correspondence analyses using mineralogical time series as proxies for wetter and drier conditions reveal that diatom assemblages varied with salinity and pH/alkalinity and suggest that groundwater outflow led to variable water chemistry for different highstands of the same magnitude. Nonmetric multidimensional scaling confirms the uniqueness of each highstand in terms of the diatom assemblages. The diatom data presented here are among only a handful of such records for Pleistocene pluvial lakes in the American West and reveal that saline alkaline lakes can yield important information despite valve preservation issues.