For roughly 65 million years, North and South America evolved as separate continents. South America was, like Australia, an isolated evolutionary laboratory: marsupials and archaic placentals there diversified into forms found nowhere else on Earth. Giant ground sloths, armoured glyptodonts, the long-necked Macrauchenia, and the terror birds (phorusrhacids) were all products of this geographic isolation.

Around 3 million years ago, the closure of the Isthmus of Panama ended that isolation. The narrowing and closing of the Central American Seaway — the shallow sea passage between the Caribbean and the Pacific — resulted from tectonic plate motion: island arcs between the Nazca and Caribbean plates coalesced into a continuous land bridge. The great faunal exchange that followed across this bridge is known to palaeontologists as the Great American Biotic Interchange (GABI).

Faunal flow ran in both directions. From north to south: horses, deer, tapirs, pumas, jaguars, llama ancestors, and camel relatives. From south to north: armadillos, opossums, peccaries, giant ground sloths (Megatherium), and Glyptodon. This exchange appeared balanced but over time revealed a dramatic asymmetry: northern species carried larger brain volumes, less specialised feeding strategies, and herd behaviours shaped by more competitive northern environments. Most of South America's distinctive megafauna disappeared within the following one to two million years; multiple factors are implicated — competition, climate change, and possibly human pressure at the end of the Pleistocene.

The closure of the Isthmus of Panama was transformative not only biologically but oceanographically and climatically. Cutting off the water exchange between the Caribbean and the Pacific altered Atlantic salinity and temperature cycling; this shift is thought to have influenced North Atlantic Deep Water formation and thus global ocean circulation — and may have contributed to triggering Northern Hemisphere glaciation. The closing of a narrow seaway set off a climate chain whose effects reach from 3 million years ago to the present.