Multiple proxies derived from the Lake Loitsana sediment sequence (NE Finland) are employed to determine the timing of deglaciation, characterise an early Holocene proglacial lake stage and reconstruct Holocene lake development. Local-scale processes causing shifts in biological assemblages are identified and the most likely Holocene mean July air temperature (T_jul) development is assessed. The study area was deglaciated shortly prior to 10 700 cal. a BP. The sediment record reflects four local events; the presence of a glacial lake, glacial lake drainage and formation of Lake Loitsana, changes in fluvial input due to progressive wetland expansion, and gradual lake infilling. The results suggest that local events have driven changes in biological assemblages through various processes, and that biotic proxies reflect changes in environmental parameters in a highly individual manner. Furthermore, biological assemblages can themselves act as important drivers, influencing the composition of other assemblages. It is suggested that future studies should consider macrophyte abundance and food-web interactions as equally important factors when assessing changes in biological assemblages. Quantitative T_jul reconstructions based on biotic proxies display contrasting trends. While T_jul reconstructions based on pollen found in the Loitsana sequence display relatively low early Holocene values, plant macrofossil and chironomid data reflect warm summer conditions also during the early Holocene, i.e. at the peak of summer insolation. The early Holocene T_jul recorded by terrestrial pollen are affected by local factors possibly combined with a delayed response of the terrestrial ecosystem compared to the aquatic one. This study emphasises the importance of using multiple proxies in palaeoenvironmental studies and shows that local factors have a potential to drive changes in biological assemblages that can affect transfer-function based temperature reconstructions.