Changes in sea level and the formation of islands impact the distributions and abundances of local flora and fauna, with palaeo-environmental investigations providing a context for biological conservation. The palaeo-environmental knowledge of the north-west of Australia during the late Quaternary is sparse, particularly the impact of island formation on local faunas.In 1991 and 1993 Peter Veth and colleagues conducted archaeological surveys of the Montebello Islands, an archipelago situated 70 -90 km from the present-day coastline of north-west Australia. A group of three caves were found during this survey on the eastern side of Campbell Island. Two of the caves, Noala and Hayne's Caves, were analysed by Veth and colleagues in the early 1990s; the last cave, Morgan's Cave, remained unanalysed because it contained negligible archaeological material. It provides an opportunity to refine the interpretation of palaeo-environmental conditions, further information on the original pre-European fauna of the north-west shelf, the formation of the islands due to sea level rise, and the impact of sea level rise on local faunas.The fossil fauna assemblage of Morgan's Cave was sorted, identified to the lowest taxonomic level possible, and counted for analysis on relative abundance for paleoenvironmental interpretation. There are marked patterns of species loss and changing relative abundances in certain species, consistent with island formation due to sea level rise. This palaeoecological interpretation can be used in conservation efforts on nearby Barrow Island, a Class A ecological reserve, and management of faunas in conservation reserves and on islands.