The Late Cenozoic closure of the seaway between the North andSouth American continents is thought to have caused extensive changes in ocean circulation and Northern Hemisphere climate. But the timing and consequences of the emergence of the Isthmus of Panama, which closed the seaway, remain controversial. Here we present stable-isotope and carbonate sand-fraction records from Caribbean sediments which, when compared to Atlantic and Pacific palaeoceanographic records, indicate that the closure caused a marked reorganization of ocean circulation starting 4.6 million years ago. Shallowing of the seaway intensified the Gulf Stream and introduced warm and saline water masses to high northern latitudes. These changes strengthened deep-water formation in the Labrador Sea over the next million years - as indicated by an increased deep-water ventilation and carbonate preservation in the Caribbean Sea - and favoured early Pliocene warming of the Northern Hemisphere. The evaporative cooling of surface waters during North Atlantic Deep Water formation would have introduced moisture to the Northern Hemisphere. Although the pronounced intensification of Northern Hemisphere glaciation between 3.1 and 2.5 million years ago substantially lagged the full development of North Atlantic Deep Water formation, we propose that the increased atmospheric moisture content was a necessary precondition for ice-sheet growth, which was then triggered by the incremental changes in the Earth's orbital obliquity.