Abstract Worldwide, large wildfires are becoming increasingly common, leading to economic damages and threatening ecosystems and human health. Under future climate change, more frequent fire disturbance may push ecosystems into non‐forested alternative stable states. Fire‐prone ecosystems such as those in the Mediterranean Basin are expected to be particularly vulnerable, but the position of tipping points is unclear. We compare long‐term palaeoecological data from Sardinia with output from a process‐based dynamic vegetation model to investigate the mechanisms controlling the complex interactions between fire, climate, and vegetation in the past and the future. Our results show that past vegetation changes from Erica‐shrublands to mixed evergreen‐broadleaved Quercus ilex‐dominated forests were driven by a climate‐induced fire regime shift. By simulating vegetation dynamics under varying fire regimes, we could reproduce Holocene vegetation trajectories and mechanistically identify tipping points. Without an immediate reduction of greenhouse gas emissions, we simulate future expansion of fire‐prone Mediterranean maquis and increasing fire occurrence. Similarly, high anthropogenic ignition frequencies and plantations of non‐native, highly flammable trees could induce a shift to fire‐adapted Erica shrublands. However, our simulations indicate that if global warming can be kept below 2°C, Quercus ilex forests will be able to persist and effectively reduce fire occurrences and impacts, making them a valuable restoration target in Mediterranean ecosystems. Synthesis. By combining long‐term records of ecosystem change with a dynamic vegetation model, we show that past climate‐driven fire regime shifts were the main driver of vegetation change, creating alternative stable states that persisted over centuries. Projected future climate change exceeding Holocene variability leads to pronounced vegetation changes and increased fire risks in our simulations, requiring new fire management strategies to maintain current ecosystem services.