Long‐term fluctuations in lake‐water optical properties were examined using a Holocene sediment sequence and multi‐proxy palaeolimnological approach in Lake Einstaken, Nordaustlandet, Svalbard. UV‐absorbance of sedimentary cladoceran remains provided information on underwater UV exposure and changes in lake‐catchment coupling processes were inferred from sediment geochemistry. In addition, aquatic community succession was used as an indicator for lake‐water bio‐optical properties and a Holocene record of sun activity (sunspots) was utilized to evaluate long‐term solar forcing. The results indicated that the UV‐absorbance of cladoceran remains was highest (i.e. maximum UV‐induced pigmentation) for a short period during the early Holocene and for several millennia during the mid‐Holocene. Sun activity was high during these time intervals, probably impacting the UV intensities, but it is probable that the amount of UV‐attenuating compounds (e.g. dissolved organic carbon (DOC)) also significantly affected the underwater UV environment and were low during high UV exposure. Benthic autotrophic communities also responded to the millennial changes in lake‐water optical properties. UV‐resistant Nostoc cyanobacterial colonies were established during the mid‐Holocene, indicative of high underwater UV intensities, and Fontinalis mosses thrived during the early Holocene, indicating a highly transparent water column. The results further suggested that underwater UV exposure decreased during the late Holocene, which is probably attributable to increased DOC and decreased solar forcing. Owing to the location of Lake Einstaken and its catchment in the periglacial barren landscape of the polar desert, the fluctuations of bio‐optical lake‐water properties were apparently forced by postglacial environmental processes and Holocene climate development. These factors controlled sea shoreline proximity, water discharge, ice‐cover duration and littoral‐benthic primary production and further affected the underwater UV environment. Although the role of solar forcing cannot be underestimated, the current record emphasizes the role of climate‐mediated lake‐catchment interactions in impacting bio‐optical properties and UV exposure of high arctic aquatic systems.