Caliche is a fairly widespread pedogenic carbonate that commonly has been used to reconstruct palaeoclimatological conditions. Stable isotopic analyses of three types of caliche nodules from Mission Bay, Texas, provide insights into the values and limitations in palaeoenvironmental interpretations. Soft incipient nodules (type I) and partially lithified chalky nodules (type II), composed of low Mg-calcite, are in situ pedogenic products in the late Quaternary soils; they represent young to intermediate caliche nodules with no obvious diagenesis and, with constraints, can be used to investigate palaeoenvironmental conditions. The well-lithified hard nodules (type III) dispersed on the beach and shallow bay exhibit complex shapes, fabrics, mineralogy and geochemical compositions. They are mature nodules that have undergone substantial diagenesis and, therefore, are believed to have lost their initial environmental signatures. The incipient nodules in the presently active grey soil and the older subjacent brown soil display significantly different δ13C values, −8·4 and −4·4‰, respectively, which indicates a change in palaeovegetation from C3/C4 mixed to C3-dominated flora. The δ13C values probably reflect a marked climate shift from warm and dry to cool and wet conditions in the middle Holocene. However, in the same grey soil, there is a sub-set of incipient caliche nodules with δ13C values around 0·1‰, which is probably due to the input of localized carbon sources in the soil (e.g. shell fragments). The occurrence of essentially identical nodules appearing from the same modern soil horizon with significantly different δ13C values questions the universal reliability of this type of data for palaeoenvironmental interpretation. This study demonstrates that, whereas the stable isotopic compositions of caliche nodules can be used for palaeoenvironmental reconstruction, diagenesis and the influence of localized carbonate sources in the soils could lead to erroneous interpretations.