Understanding the mechanisms that drive population dynamics is fundamental for management of wild populations. The guanaco (Lama guanicoe) is one of two wild camelid species in South America. We evaluated the effects of density dependence and weather variables on population regulation based on a time series of 36 years of population sampling of guanacos in Tierra del Fuego, Chile. The population density varied between 2.7 and 30.7 guanaco/km², with an apparent monotonic growth during the first 25 years; however, in the last 10 years the population has shown large fluctuations, suggesting that it might have reached its carrying capacity. We used a Bayesian state-space framework and model selection to determine the effect of density and environmental variables on guanaco population dynamics. Our results show that the population is under density dependent regulation and that it is currently fluctuating around an average carrying capacity of 45,000 guanacos. We also found a significant positive effect of previous winter temperature while sheep density has a strong negative effect on the guanaco population growth. We conclude that there are significant density dependent processes and that climate as well as competition with domestic species have important effects determining the population size of guanacos, with important implications for management and conservation.