The first excavations on Obi Island, north-east Wallacea, reveal three phases of occupation beginning in the terminal Pleistocene. Ground shell artefacts appear at the end of the terminal Pleistocene, the earliest examples in Wallacea. In the subsequent early Holocene occupation phase, ground stone axe flakes appear, which are again the earliest examples in Wallacea. Ground axes were likely instrumental to subsistence in Obi's dense tropical forest. From ~8000 BP there was a hiatus lasting several millennia, perhaps because increased precipitation and forest density made the sites inhospitable. The site was reoccupied in the Metal Age, with this third phase including quadrangular ground stone artefacts, as well as pottery and pigs; reflecting Austronesian influences. Greater connectivity at this time is also indicated by an Oliva shell bead tradition that occurs in southern Wallacea and an exotic obsidian artefact. The emergence of ground axes on Obi is an independent example of a broader pattern of intensification at the Pleistocene-Holocene transition in Wallacea and New Guinea, evincing human innovation in response to rapid environmental change.