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Studying tropical hydroclimate and productivity change in the past is critical for understanding global climate dynamics. Northwest Australia is an ideal location for investigating Australian monsoon dynamics, the variability of the Indonesian Throughflow (ITF), and their impact on past productivity and Pacific warm pool evolution, which remain poorly understood during the 40 kyr world in the mid‐early Pleistocene. In this study, we present multi‐proxy records from International Ocean Discovery Program (IODP) Site U1483 in the Timor Sea spanning the last 2,000 ka, including orbitally‐resolved records from the 40 kyr world between 2,000 and 1,300 ka. Our results suggest that northwest Australia underwent a step of increased aridification and that productivity in the Timor Sea declined during the transition from ∼1,700 to ∼1,400 ka. We attribute this aridification to the reduced moisture supply to this region caused by the ITF restriction and warm pool contraction. We ascribe the declined productivity to a decrease in the nutrient supply of the Pacific source water associated with global nutrient redistribution. At orbital timescale, multiple mechanisms, including sea level changes, monsoon, and the Intertropical Convergence Zone (ITCZ) dynamics, and variations in the ITF and Walker circulation could have controlled variations of productivity and terrigenous input in the Timor Sea during the 40 kyr world. Our bulk nitrogen and benthic carbon isotope records suggest a strong coupling to biogeochemical changes in the Pacific during this period. This research contributes to a better understanding of tropical hydroclimate and productivity changes during the 40 kyr world. Plain Language Summary: The northwest Australian region is located at the southwestern edge of the Indo‐Pacific Warm Pool and experiences a seasonal monsoon climate. Oceanic and climate conditions in this region are also strongly influenced by the Indonesian Throughflow (ITF), which is the only tropical pathway in the modern ocean connecting the Pacific and Indian Oceans and providing the main conduit for the exchange of water, salt, and heat between these oceans. These conditions make northwest Australia a strategic location to explore Australian monsoon dynamics, the variability of the ITF, and the interaction between tropical hydroclimate and productivity in the past. However, these processes are poorly documented during the 40 kyr world in the mid‐early Pleistocene, when glacial‐interglacial cycles mainly varied at the 41 kyr obliquity band. Here, we present multiple‐proxy marine records from a site directly impacted by the ITF and we examine terrigenous input and productivity changes in this region over the last 2,000 kyr. Our results suggest that northwest Australia underwent a step of increased aridification and that productivity in the Timor Sea declined during the transition from ∼1,700 to ∼1,400 ka, due to restriction of the ITF, warm pool contraction, and decreased nutrient supply from the Pacific source water. Key Points: Northwest Australia underwent aridification from ∼1,700 to 1,400 ka due to restricted Indonesian Throughflow and warm pool contractionDecreased productivity in the Timor Sea from ∼1,700 to 1,400 ka reflected decreased nutrient supply from Pacific source waterOrbital variation in productivity and terrigenous input in the Timor Sea during the 40 kyr world are driven by multiple mechanisms [ABSTRACT FROM AUTHOR]