Global climate cooling from greenhouse to icehouse conditions occurred across an enigmatic transitional interval during the Eocene epoch characterized by incipient polar ice-sheet formation as well as short-lived warming events, of which the Middle Eocene Climatic Optimum (MECO) is most noticeable. Understanding this critical period requires high-resolution records that are being gathered in marine basins, but are still lacking in the terrestrial realm. Here, we provide a precisely-dated terrestrial record crossing the MECO time interval from the Xining Basin (NW China). We document a rapid aridification step and the onset of obliquity-dominated climate cyclicity indicated by lithofacies and pollen records dated at 40.0 Ma at the base of magnetochron C18n.2n. This shift is concomitant - within error - with the MECO peak warming in Ocean Drilling Program Site 1258 for which we reassessed the magnetostratigraphic age at 40.0 Ma (also at base of magnetochron C18n.2n). The rapidity of the shift observed in the Xining Basin and the region-wide aridification and monsoonal intensification reported around 40 Ma suggests Asian paleoenvironments were responding to global climate changes associated with the MECO. However, the Xining records show only the permanent shift but not the transient peak warming observed in marine MECO records. We thus relate this permanent aridification to occur during the post-MECO cooling. We propose the mechanisms linking global climate to Asian paleoenvironments may be eustatic fluctuations driving the stepwise retreat of the proto-Paratethys epicontinental sea or simply global cooling reducing moisture supply to the continental interior. In any case, Eocene global climate cooling from greenhouse to icehouse conditions seem to have played a primary role in shaping Asian paleoenvironments.