Here we present paleoenvironmental and paleoclimatic reconstructions of the Brazilian Pampa based on stable isotopes (δ13C, δ18O) in tooth enamel of the Pleistocene camelids Lama guanicoe and Hemiauchenia paradoxa from the Chuy Creek fossil assemblage, including one H. paradoxa from a stratigraphic level within a loess unit deposited during the Last Glacial Maximum (26.5–19 ka b2k). The δ13C results show that both species fed mostly on C3 plants, although the mixed diets of L. guanicoe included ~30% C4 or CAM plants. H. paradoxa had C3 diets with <10% C4 or CAM plants. Both species exhibit higher δ18O and aridity indexes compared to other mammals from the assemblage, consistent with ingestion of 18O‐enriched water from plants growing in arid/semi‐arid conditions. A comparison with δ13C of camelids from Argentina indicates the camelids from Chuy Creek fed on vegetation similar to that of Dry Pampa, Monte and Patagonic xerophytic steppes. Aridification and expansion of dry steppes in southern Brazil suggest a climate‐driven northeastwards shift of the Arid Diagonal of South America that may have contributed to local extinction of the Pleistocene megafauna. These Lateglacial environmental changes are reflected in the characteristics of the plant and mammalian assemblages of the modern Brazilian Pampa.