This article concerns the paleoenvironment of the Sistan area of Central Asia, where the proto-urban Hilmand civilization developed during the third millenium B.C. Although involved in long-distance trade, it was essentially self-supporting and geographically isolated, and therefore provides a case-study of the balance between population and environment in this arid region. Geographic, climatic, and hydrographic conditions are described. Although river courses have changed and riparian forests have disappeared, the climate of today is similar to that of 4000 years ago. The Hilmand people evidently concentrated on exploiting the lakes of the region and immediately adjacent environmental zones, as indicated by archaeological data from Shahr-i Sokhta. While involved in long distance trade, the primary function of Shahr-i Sokhta was primarily as a local center for redistributing products from surrounding ecological zones.