The Pantanal of Mato Grosso, Brazil, is famous for its luxurious plant and animal life. We combine a literature review with recent work and show that species diversity is large but that most major plant and animal groups contain a large number of not wetland-specific species that depend on permanently terrestrial habitats within the Pantanal, or are restricted to dry areas during the low water period. These species occur also in the neighbouring biomes of Cerrado, Amazon Forest or Chaco. Until now, very few endemic species have been described, however, there are large populations of species in the Pantanal that are considered rare or endangered in South America. The number of trees adapted to long term flooding is low in comparison with the Amazon River floodplain. We hypothesize that the reason for the lack of local endemisms and the occurrence of a large number of species with a large ecological amplitude is the climatic instability of the region of the Pantanal, which suffered severe drought during glacial periods. The instability of the actual climate, which is characterized by multi-annual wet and dry periods, has a strong impact on distribution, community structure and population size of many plant and animal species and hinders spatial segregation of populations. The dependence of the system on the flood pulse makes the Pantanal very vulnerable to human induced changes in hydrology and the predicted changes in global climate.