There are two different dune systems in central Australia; regional quartz dunefields and transverse gypsiferous dunes associated with playa lakes. These two systems, especially gypsiferous dunes at Lake Amadeus, the largest playa in central Australia, provide a sedimentary, geomorphological and environmental history of the region during the late Quaternary. The gypsifierous dunes consist of a surficial gypcrete overlying an aeolian sediment sequence below, a mixture of gypsum sand and quartz sand. No clay pellets have been found in the dune sequence, in significant contrast to the gypsiferous clay dunes in other parts of Australia. Three possible models of the environmental controls of gypsiferous dune formation are discussed. The most plausible one suggests simultaneous gypsum precipitation and deflation. Sandsized gypsum was precipitated in a groundwater-seepage zone around the playa margin during seasonally high water-tables and these crystals were deflated onto land during dry intervals, forming the marginal gypsiferous dunes. These processes require conditions of high regional water-table, strong climatic seasonality and probably a windier and overall wetter climate. At least two separate gypsiferous-duneforming episodes can be recognized. The age of formation of the younger one has been dated by thermoluminescence at 44–54 ka. The gypcrete crust capping the dunes is characterized by intergrown microcrystalline gypsum crystals, showing evidence of leaching, dissolution and recrystallization. It is interpreted as a pedogenic product formed during a stable period after accumulation of the gypsiferous dune. After the construction of the younger gypsiferous dune, there was a major episode of activation of regional quartz dunefields which formed thick quartz sand mantles overlying gypsiferous dunes on both playa margins and the dune islands within the playa. An equivalent aeolian sand layer was deposited within the playa. Soil structures in this unit indicate that the sand sheet over the playa was later colonized by vegetation. Activation of the regional dunefields suggests a major period of dry climate, which, although not dated, may correlate with the last glacial maximum identified as a period of maximum aridity from 25 to 18 ka at other sites in Australia.