The study of a Posidonia australis sediment archive has provided a record of ecosystem dynamics and processes over the last 600 years in Oyster Harbour (SW Australia). Ecosystem shifts are a widespread phenomenon in coastal areas, and this study identifies baseline conditions and the time-course of ecological change (cycles, trends, resilience and thresholds of ecosystem change) under environmental stress in seagrass-dominated ecosystem. The shifts in the concentrations of chemical elements, carbonates, sediments <0.125 mm and stable carbon isotope signatures (δ13C) of the organic matter were detected between 1850s and 1920s, whereas the shift detected in P concentration occurred several decades later (1960s). The first degradation phase (1850s–1950s) follows the onset of European settlement in Australia and was characterized by a strong increase in sediment accumulation rates and fine-grained particles, driven primarily by enhanced run-off due to land clearance and agriculture in the catchment. About 80% of total seagrass area at Oyster Harbour was lost during the second phase of environmental degradation (1960s until present). The sharp increase in P concentration and the increasing contribution of algae and terrestrial inputs into the sedimentary organic matter pool around 1960s provides compelling evidence of the documented eutrophication of the estuary and the subsequent loss of seagrass meadows. The results presented demonstrate the power of seagrass sedimentary archives to reconstruct the trajectories of anthropogenic pressures on estuarine ecosystem and the associated regime shifts, which can be used to improve the capacity of scientists and environmental managers to understand, predict and better manage ecological change in these ecosystems.