Fine-grained rhythmites are a recurrent sedimentary facies in glacially influenced marine and lacustrine sequences throughout geological time. Paleoenvironmental interpretation of these ancient deposits has been a challenge, because similar rhythmites may have formed in different depositional contexts. In the Paraná Basin, the Itararé Group contains numerous successions of fine-grained rhythmites, deposited in the Carboniferous during the Late Paleozoic Ice Age (LPIA). The described rhythmites are characterized by the intercalation of fine-grained sandstones and siltstones with clay and clayey siltstones. We have identified two distinct types of rhythmites based on the contact between couplets, couplets thickness, sedimentary structures, and geochemical proxies. Type 1 rhythmites are characterized by intercalation of very fine-grained sandstone–siltstone (60–90%) with claystone (40–10%) and normal grading. Type 2 rhythmites are characterized by couplets of siltstone (50%) and claystone (50%), with a sharp contact within couplets. Type 1 rhythmites are interpreted as turbidity-current deposits, and Type 2 as distal deposits of hypopycnal flow. Geochemical proxies suggest deposition of the rhythmites under marine conditions, in a period of rising temperature and humidity, and with intensified chemical weathering. These paleoenvironmental characteristics are in agreement with the interglacial period. The preservation of thick rhythmite successions of the Itararé Group in the southern part of the basin was controlled by the constant creation of accommodation space inside paleovalleys.