MNK Skull is one of the most significant archaeological sites in Olduvai Gorge, particularly due to the previous discovery of human fossils referred to in the paper where the Homo habilis taxon was originally defined. An important archaeological assemblage is contained in the same horizon as the hominin fossils, constituting the last evidence of both Homo habilis remains and handaxe-free tool kits in the Olduvai Gorge sequence. Our excavations at the site are the first to be conducted since the original work in the 1960s, and sought to refine the archaeological context wherein the Homo habilis remains were discovered. Chronostratigraphic results place the MNK Skull sequence in Middle Bed II prior to deposition of Tuff IIB. The assemblage was deposited near the shoreline, as Palaeolake Olduvai withdrew into the basinal depocentre, and fossils and stone tools were subjected to significant post-depositional processes. The assemblage was affected by mudflow deposits that buried and preserved the assemblage but also entrained surficial bone and lithic elements into the flow. Rather than an occupation site as originally interpreted, the assemblage is better understood as a background deposit, possibly accumulated on an unconformity surface over a long period of time. The stone tool assemblage is typical of the Oldowan, with no technological elements announcing the appearance of the Acheulean, which is well attested to across the Olduvai sequence in post-Tuff IIB times. Our results highlight that, with an approximate age of circa 1.67 Ma, MNK Skull stands as a key site to understand the late Oldowan and the disappearance of Homo habilis in East Africa.