Giant vertebrates dominated many Pleistocene ecosystems. Many were herbivores, and their sudden extinction in prehistory could have had large ecological impacts. We used a high-resolution 130,000-year environmental record to help resolve the cause and reconstruct the ecological consequences of extinction of Australia's megafauna. Our results suggest that human arrival rather than climate caused megafaunal extinction, which then triggered replacement of mixed rainforest by sclerophyll vegetation through a combination of direct effects on vegetation of relaxed herbivore pressure and increased fire in the landscape. This ecosystem shift was as large as any effect of climate change over the last glacial cycle, and indicates the magnitude of changes that may have followed megafaunal extinction elsewhere in the world.