To assess zonal temperature and biogeographical patterns in the Paleogene of the Southern Ocean, we present new multi-proxy air and sea surface temperature data for the latest Paleocene (~57–56 Ma) and the Paleocene-Eocene Thermal Maximum (PETM; ~56 Ma) from the northern margin of the Australo-Antarctic Gulf (AAG). The various proxies document the well-known late Paleocene gradual warming and, superimposed, two late Paleocene pre-cursor warming events, hundreds of kyrs prior to the PETM. Remarkably, however, air and sea surface temperature reconstructions for the AAG and SW Pacific during the latest Paleocene, PETM and Early Eocene Climatic Optimum (~53–49 Ma) show similar trends and, within proxies, similar absolute temperatures. The record implies that the exceptional warmth previously recorded in the SW Pacific extended westward into the AAG. This contrasts with the modeled circulation and temperature patterns. We suggest that simulations of ocean circulation underestimate heat transport in the SW Pacific due insufficient resolution, not allowing for mesoscale eddy-related heat transport. We argue for a systematic approach to tackle model and proxy biases in marginal marine settings, including assessment of underexplored factors as high-latitude proxy mechanisms to confidently assess temperature in these non-analogue climates.