This review of late-Holocene palaeoclimatology represents the results from a PAGES/CLIVAR Intersection Panel meeting that took place in June 2006. The review is in three parts: the principal high-resolution proxy disciplines (trees, corals, ice cores and documentary evidence), emphasizing current issues in their use for climate reconstruction; the various approaches that have been adopted to combine multiple climate proxy records to provide estimates of past annual-to-decadal timescale Northern Hemisphere surface temperatures and other climate variables, such as large-scale circulation indices; and the forcing histories used in climate model simulations of the past millennium. We discuss the need to develop a framework through which current and new approaches to interpreting these proxy data may be rigorously assessed using pseudo-proxies derived from climate model runs, where the 'answer' is known. The article concludes with a list of recommendations. First, more raw proxy data are required from the diverse disciplines and from more locations, as well as replication, for all proxy sources, of the basic raw measurements to improve absolute dating, and to better distinguish the proxy climate signal from noise. Second, more effort is required to improve the understanding of what individual proxies respond to, supported by more site measurements and process studies. These activities should also be mindful of the correlation structure of instrumental data, indicating which adjacent proxy records ought to be in agreement and which not. Third, large-scale climate reconstructions should be attempted using a wide variety of techniques, emphasizing those for which quantified errors can be estimated at specified timescales. Fourth, a greater use of climate model simulations is needed to guide the choice of reconstruction techniques (the pseudo-proxy concept) and possibly help determine where, given limited resources, future sampling should be concentrated.