Benthic foraminiferal data from Ocean Drilling Program Site 1098 indicate significant changes in deep-water conditions of the Palmer Deep, western Antarctic Peninsula margin, throughout the Holocene (13 ka to present). The earliest Holocene represents a period of transition from the Last Glacial Maximum (LGM). Cold bottom waters, similar to saline shelf water (SSW), dominated the middle Holocene. The late Holocene in the Palmer Deep has been characterized by alternating dominance of circumpolar deep water (CDW) and saline shelf water. These changes have global oceanographic and climatic implications. We suggest that the middle Holocene bottom-water record, in the absence of circumpolar deep water on the western Antarctic Peninsula shelf, indicates high saline shelf water production and/or weakened circumpolar deep water production during the middle Holocene climatic optimum. The late Holocene benthic foraminiferal record indicates rapidly fluctuating sea-ice conditions and may indicate a teleconnection between the South Pacific and Southern Ocean, thus having implications related to the Southern Oscillation Index.