Stabilized and active dunes and sand sheet deposits abound in a small lake‐dotted semi‐arid region of the Western Pampean Dunefield, Argentina. Here, a multi‐scale and multi‐proxy study of three sites, across a hydrologic gradient from lakes to a dryland with groundwater levels at more than 25 m depth, analyzes calcareous and ferruginous rhizoliths, calcareous crusts, hypocoatings, pedogenic carbonate and amorphous Mn‐oxide precipitates within blowout dunes. These palustrine‐related features indicate significantly wetter conditions that allowed the development of shallow lakes and expanding wetlands during the Pleistocene–Holocene transition, limited by associated optically stimulated luminescence ages between ca. 14.7 and 11.6 ka. These wetter conditions, also identified in other nearby proxy records, may be associated with a strengthened South American Monsoon System, potentially during the Younger Dryas Chronozone, though other geological, ecological and climatic forcings cannot be ruled out with available data. Such a scenario lacks a modern analogue, since current hydrologic excess, evidenced in the formation of lakes and new rivers, is not observed in the localities which record paleolakes. This study underlines the variable conditions for pronounced hydrologic excess in semi‐arid eolian environments in western Argentina with complex ecological, anthropogenic and climatic linkages.