In the highlands of New Guinea, the development of agriculture as an indigenous innovation during the Early Holocene is considered to have resulted in rapid loss of forest cover, a decrease in forest biodiversity and increased land degradation over thousands of years. But how important is human activity in shaping the diversity of vegetation communities over millennial time-scales? An evaluation of the change in biodiversity of forest habitats through the Late Glacial transition to the present in five palaeoecological sites from highland valleys, where intensive agriculture is practised today, is presented. A detailed analysis of the longest and most continuous record from Papua New Guinea is also presented using available biodiversity indices (palynological richness and biodiversity indicator taxa) as a means of identifying changes in diversity. The analysis shows that the collapse of key forest habitats in the highland valleys is evident during the Mid–Late Holocene. These changes are best explained by the adoption of new land management practices and altered disturbance regimes associated with agricultural activity, though climate change may also play a role. The implications of these findings for ecosystem conservation and sustainability of agriculture in New Guinea are discussed.