Vertical changes in distribution, abundance, and ichnodiversity of ichnocoenoses in alluvial deposits of the Willwood Formation suggest significantly drier moisture regimes in the Bighorn Basin, Wyoming, during the Paleocene–Eocene Thermal Maximum (PETM), a transient period of global warming. The Willwood Formation at Polecat Bench contains an abundant assemblage of ichnofossils, including various types of rhizoliths and invertebrate trace fossils, such as Naktodemasis bowni, Camborygma litonomos, Edaphichnium lumbricatum, cf. Cylindricum isp., cf. Planolites isp., cf. Steinichnus, and cocoon traces. These comprise six distinct ichnocoenoses, which are categorized as dominantly terraphilic, hygrophilic, or hydrophilic based on the inferred moisture regimes of their most abundant ichnofossil morphotypes and associated pedogenic features, including other trace fossils and rhizoliths. The interpreted moisture regimes correlate well with the paleoenvironments of their host lithofacies, as inferred from sedimentology and paleopedology. Outside the PETM interval at Polecat Bench, abundant avulsion deposits and thin, compound paleosols containing hygrophilic and hydrophilic ichnocoenoses suggest frequent depositional events and predominantly poor to imperfect soil-drainage conditions. Within the PETM interval, thick, cumulative paleosol profiles with abundant terraphilic to hygrophilic ichnocoenoses suggest significantly improved drainage conditions. Lithofacies and ichnocoenoses above the PETM interval are not significantly different from those below the interval, indicating a return to pre-PETM moisture regimes. These conclusions support previous studies that suggest the Bighorn Basin experienced transient drying during this interval. This study demonstrates that ichnocoenoses and their ichnopedologic associations can be used to refine paleohydrologic and paleoclimatic generalizations inferred from paleoclimate models.