This article presents an evaluation of the importance of algal palynomorphs for palaeoenvironmental and climatic reconstructions. The palynomorphs were identified in sediments formed during the 20th century in the Tramandaí Lagoon (southern Brazil). The sediments sample corresponds to the 1905–97 period as dated by ²¹⁰Pb. Five algal palynomorph zones (IA–VA) were defined based on Botryococcus ∶ and Pediastrum frequency of occurrence ratio as well as on the presence of other freshwater algal palynomorphs. The sensitiveness of algal Chlorophyta palynomorphs to environmental variables, such as temperature and salinity, reveals that these palynomorph zones are related to five major stages of the Tramandaí Lagoon's evolution, reflecting variations in the regional hydrological cycle. The last identified stage (VA) is characterized by a notable increase in marine algae and a decrease in freshwater algal palynomorphs. This marine algal palynomorph enrichment was caused by an increase in sea water influx as a result of the construction of an artificial channel connecting the lagoon with the Atlantic Ocean. The obtained results on algal palynomorph frequencies of occurrence were compared with available records of water-level measurements from the coastal Mirim Lagoon, situated relatively close to the Tramandaí Lagoon, and to the Southern Oscillation Index of the Australian Bureau of Meteorology. Wetter/drier periods of the past century as revealed by algal palynomorph frequencies generally coincide with low-frequency water-level oscillations in the Mirim Lagoon and are probably related to interannual variations of rainfall in the region, driven by the variability of the El Niño–Southern Oscillation phenomena.