The progressive aridification of the Australian continent and the coincident decline of mesic forests have been a powerful driver of allopatric and environmental speciation in native species. The relictual mesic forests of the eastern seaboard now harbour a diverse group of endemic fauna, including the wood-feeding cockroaches of the genus Panesthia, which reached the continent via two separate invasions from Melanesia. The more recent of these colonisation events gave rise to a group of five recognised species, occurring in mainland woodlands, sclerophylls, and rainforests, as well as the forests and grasslands of the Lord Howe Island Group. Due to limited sampling in molecular studies and doubt regarding the standing taxonomy, there is little certainty about relationships among the species and a poor understanding of the effects of ancient climatic change upon their evolution. We undertook a comprehensive phylogenetic analysis of the clade, using complete mitogenomes and nuclear ribosomal markers from nearly all known morphospecies and populations. Our time-calibrated phylogenetic analyses reveal an additional six unrecognized, highly divergent lineages and suggest that these have arisen primarily through vicariance as rainforests fragmented during Plio-Pleistocene glacial cycles (2–5 million years ago). Ancestral niche estimations also evidence a tropical rainforest origin for the group, followed by at least three niche transitions into drier forest, including one associated with the singular colonisation of the Lord Howe Island Group. Finally, we find evidence of frequent, parallel wing reduction in potential association with the contraction of forest habitats into small refugia. Our results reiterate the far-reaching role of ancient aridification in driving speciation, niche expansion, and morphological evolution in Australian fauna.