Spanning a latitudinal range typical for deserts, the Indian peninsula is fertile instead and sustains over a billion people through monsoonal rains. Despite the strong link between climate and society, our knowledge of the long-term monsoon variability is incomplete over the Indian subcontinent. Here we reconstruct the Holocene paleoclimate in the core monsoon zone (CMZ) of the Indian peninsula using a sediment core recovered offshore from the mouth of Godavari River. Carbon isotopes of sedimentary leaf waxes provide an integrated and regionally extensive record of the flora in the CMZ and document a gradual increase in aridity-adapted vegetation from ???4,000 until 1,700 years ago followed by the persistence of aridity-adapted plants after that. The oxygen isotopic composition of planktonic foraminifer Globigerinoides ruber detects unprecedented high salinity events in the Bay of Bengal over the last 3,000 years, and especially after 1,700 years ago, which suggest that the CMZ aridification intensified in the late Holocene through a series of sub-millennial dry episodes. Cultural changes occurred across the Indian subcontinent as the climate became more arid after ???4,000 years. Sedentary agriculture took hold in the drying central and south India, while the urban Harappan civilization collapsed in the already arid Indus basin. The establishment of a more variable hydroclimate over the last ca. 1,700 years may have led to the rapid proliferation of water-conservation technology in south India. Copyright 2012 by the American Geophysical Union.