Paleontological deposits on Rusinga Island, Lake Victoria, Kenya, provide a rich record of floral and faunal evolution in the early Neogene of East Africa. Yet, despite a wealth of available fossil material, previous paleoenvironmental reconstructions from Rusinga have resulted in widely divergent results, ranging from closed forest to open woodland environments. Here, we present a detailed study of the sedimentology and fauna of the early Miocene Hiwegi Formation at Waregi Hill on Rusinga Island, Kenya. Our new sedimentological analyses demonstrate that the Hiwegi Formation records an environmental transition from the bottom to the top of the unit. Lower in the Hiwegi Formation, satin-spar calcite after gypsum in siltone deposits are interpreted as evidence for open hypersaline lakes. Moving up-section, carbonate deposits – interpreted previously as evidence of aridity – are actually diagenetic calcite cements, which preserve root systems of trees; further up-section, the upper-most paleosol layer contains abundant root traces and tree-stump casts, previously interpreted as evidence of a closed-canopy forest. These environmental differences are reflected by differences in faunal composition and abundance data from Hiwegi Formation fossils sites R1 and R3. Taken together, this work suggests that divergent paleoenvironmental reconstructions in previous studies likely suffered from time-averaging across multiple environments. Further, our results demonstrate that during the early Miocene habitats in Rusinga’s Hiwegi Formation varied both spatially and temporally. From a regional perspective, it has been argued that during the early Neogene a broad forested environment stretched across the African continent, transitioning later to predominately open landscapes that characterizes the region today. Our results challenge this simple model, suggesting instead that local or regional habitat heterogeneity already existed in the early Miocene. This has important implications for interpretations of the selective pressures faced by early Miocene fauna, including Rusinga Island’s well-preserved ape and catarrhine primates.