Carbon and oxygen isotopes (δ13C and δ18O) in tree rings are widely used to reconstruct palaeoclimate variables such as temperature during the Holocene (12 thousand years ago - present), and are used increasingly in deeper time. However, their use is largely restricted to arboreal trees, which excludes potentially important data from prostrate trees and shrubs, which grow in high latitude and altitude end-member environments. Here, we calibrate the use of δ13C and δ18O as climatic archives in two modern species of southern beech (Nothofagus) from Tierra del Fuego, Chile, at the southern limit of their current range. We show that prostrate trees are potentially suitable archives for recording climatological means over longer periods (on the order of decades), which opens up these important environments for tree ring isotope analysis. We then apply our new understanding to a remarkable late Neogene (17–2.5 Ma) fossil Nothofagus assemblage from the Transantarctic Mountains, Antarctica, representative of a prostrate tundra shrub growing during a period of significant ice sheet retreat. The δ13C of the fossil cellulose was found to be ~4‰ enriched relative to that of the modern tress. This is likely to be due to a combination of a more positive δ13C of contemporaneous atmospheric CO2 and enhanced water use efficiency at the fossil site. Using the cellulose-δ18O in the fossil wood, we are able to reconstruct precipitation oxygen isotopes over the Antarctic interior for the first time for this time period. The results show that δ18Oprecip over Antarctica was −16.0 ± 4.2‰, around 12‰ enriched relative to today, suggesting changes in the hydrological cycle linked to warmer temperatures and a smaller ice sheet.