The Songliao Basin, northeast China, possesses an excellent Cretaceous lake sediment record that provides an opportunity to investigate Cretaceous terrestrial climate and environmental conditions. We measured total organic matter (TOC), aliphatic and aromatic hydrocarbons, marine biomarkers and δ¹³C and δD compositions of individual n-alkanes in lacustrine sediments from the Nenjiang Formation (K₂n¹⁺²) in drill core J79, taken in the Songliao Basin. Our data indicate a punctuated continental climate and environment during the Late Cretaceous. Differences in the hydrogen isotope values between mid- and long-chain n-alkanes (ΔδD_mid-long) and the abundance of retene suggest a change from a warm and humid climate during the lower part of K₂n¹, to a cool and arid climate during the upper part of K₂n¹, and then back to a humid climate during the lower part of K₂n². Presence of marine biomarkers 24-n-propyl-cholestane (0–8.0 μg/g) and 24-iso-propyl-cholestane (0–5.7 μg/g) support an inference for periodic seawater incursions into paleo Songliao Lake, which persisted under humid climate conditions. An anoxic and stratified water column existed in the lower part of K₂n¹, as indicated by low pristane/phytane ratios (Pr/Ph < 0.6) and high gammacerane concentrations (15.3–183.5 μg/g TOC), caused by the periodic seawater transgressions. Moreover, an environment of high evaporation and near closure of the transgression channel resulted in a declining paleolake level, higher salinity and anoxic water during the upper part of K₂n¹. Transgressions, however, occurred during the lower part of K₂n², followed by a massive input of fresh water that led to brackish-to-freshwater conditions in the euphotic zone, as indicated by high Pr/Ph ratios (> 1.2) and low gammacerane concentrations (8.6–89.2 μg/g TOC). Analysis of the core showed that there were three major hydrologic controls on the paleolake: marine transgressions, paleoclimate and river input.