Global climate cooled from the early Eocene hothouse (~ 52–50 Ma) to the latest Eocene (~ 34 Ma). At the same time, the tectonic evolution of the Southern Ocean was characterized by the opening and deepening of circum-Antarctic gateways, which affected both surface- and deep-ocean circulation. The Tasman Gateway played a key role in regulating ocean throughflow between Australia and Antarctica. Southern Ocean surface currents through and around the Tasman Gateway have left recognizable tracers in the spatiotemporal distribution of plankton fossils, including organic-walled dinoflagellate cysts. This spatiotemporal distribution depends on physico-chemical properties of the water masses in which these organisms thrived. The degree to which the geographic path of surface currents (primarily controlled by tectonism) or their physico-chemical properties (significantly impacted by climate) have controlled the composition of the fossil assemblages has, however, remained unclear. In fact, it is yet poorly understood to what extent oceanographic response as a whole was dictated by climate change, independent of tectonics-induced oceanographic changes that operate on longer time scales. To disentangle the effects of tectonism and climate in the southwest Pacific Ocean, we target a climatic deviation from the long-term Eocene cooling trend, a 500 thousand year long global warming phase termed the Middle Eocene Climatic Optimum (MECO; ~ 40 Ma). The MECO warming is unrelated to regional tectonism, and thus provides a test case to investigate the oceans physiochemical response to climate change only. We reconstruct changes in surface-water circulation and temperature in and around the Tasman Gateway during the MECO through new palynological and organic geochemical records from the central Tasman Gateway (Ocean Drilling Program Site 1170), the Otway Basin (southeastern Australia) and the Hampden Section (New Zealand). Our results confirm that dinocyst communities track tectonically driven circulation patterns, yet the variability within these communities can be driven by superimposed temperature change. Together with published results from the east of the Tasman Gateway, our results suggest that as surface-ocean temperatures rose, the East Australian Current extended further southward during the peak of MECO warmth. Simultaneous with high sea-surface temperatures in the Tasman Gateway area, pollen assemblages indicate warm temperate rainforests with paratropical elements along the southeastern margin of Australia. Finally, based on new age constraints we suggest that a regional southeast Australian transgression might have been caused by sea-level rise during MECO.