Aridity is an important determinant of species distributions, shaping both ecological and evolutionary diversity. Lizards and snakes are often abundant in deserts, suggesting a high potential for adaptation or acclimation to arid habitats. However, phylogenetic evidence indicates that squamate diversity in deserts may be more strongly tied to speciation within arid habitats than to convergent evolution following repeated colonization from mesic habitats. To assess the frequency of evolutionary transitions in habitat aridity while simultaneously testing for associated changes in water-balance physiology, we analyzed estimates of total evaporative water loss (EWL) for 120 squamate species inhabiting arid, semiarid, or mesic habitats. Phylogenetic reconstructions revealed that evolutionary transitions to and from semiarid habitats were much more common than those between arid and mesic extremes. Species from mesic habitats exhibited significantly higher EWL than those from arid habitats, while species from semiarid habitats had intermediate EWL. Phylogenetic comparative methods confirmed this association between habitat aridity and EWL despite phylogenetic signal in each. Thus, the historical colonization of arid habitats by squamates is repeatedly associated with adaptive changes in EWL. This physiological convergence, which may reflect both phenotypic plasticity and genetic adaptation, has likely contributed to the success of squamates in arid environments.