The interaction between aeolian dunes of the Iberian erg and Tethys waters during the mid-Cretaceous led to a variety of sedimentary facies associations such as subtidal deposits, aeolian dunes, playa lakes, coastal lakes with tidal creeks, and marshes and lagoonal embayments with tide-influenced delta deposits. Facies associations are organized in several stacked cycles. Every cycle is defined by a sand-drift surface separating playa lake deposits below from aeolian dune deposits above, followed by a transgressive surface separating aeolian deposits below from shallow marine deposits above. The latter are covered by playa lake deposits and finally topped by the next sand-drift surface. Similar marine–erg margin cycles have been explained previously in terms of high-order relative sea-level variations (normally controlled by glacioeustasy). The studied erg margin developed during the mid-Cretaceous which is considered to be the archetypal example of a polar ice-free greenhouse period. This manuscript presents an alternative explanation for the cycles as caused by climate-induced variations in the aeolian sediment supply. In this scenario, orbitally induced latitudinal shifts of the boundary between climate belts led to alternating periods of increased and decreased precipitation in the highland catchments of the back-erg system (Variscan Iberian Massif). When climate belts shifted to lower latitudes, back-erg highlands were under the influence of the Northern Warm Humid Belt. While arid conditions prevailed in the lowland central-erg, increased precipitation in the highlands and the consequent recharge of ground water led to a rise of the phreatic level in the erg system; that diminished wind erosion and windblown sediment input to the fore-erg, so that the desert margin contracted. With ongoing basin subsidence this favoured the transgression. The increased desert-ground water flux favoured permanent coastal lakes in the fore-erg margin and the local development of vegetation. In places where such lakes (lagoons) were connected to the sea, tidal channels were active, as seen nowadays along the desert coast of Qatar (Persian Gulf). When climate belts moved to higher latitudes, the catchment areas in the back-erg Iberian Massif were under the influence of the Northern Hot Arid belt and a decrease of precipitation led to a drop of the phreatic level, allowing deflation of dunes and exposed wadi channel floors, and the formation of desert pavements and deflation lags in the back-erg area; this favoured the import of large volumes of windblown sand and dust, forcing progradation of the erg and consequently a retreat of the coastline. The sand fraction accumulated in climbing aeolian dunes and dust was trapped in extensive playa lake systems. Another long-term allocyclic control is formed by active extensional tectonics that enhanced the creation of accommodation space, especially in the first cycle. A high ground water table sustained by subsurface water supply from the Variscan Iberian Massif generated coastal fresh/brackish lakes in which tide-influenced meandering channels and salt marshes developed. Erg margin cycles thin upward in response to a decrease of the rate of basin subsidence, suggesting that transgressions led to deep erosion of the underlying aeolian dune sands.