Species richness is greatest in the tropics and much of this diversity is concentrated in mountains. Janzen (1967) proposed that reduced seasonal temperature variation selects for narrower thermal tolerances and limited dispersal along tropical elevation gradients. These locally adapted traits should, in turn, promote reproductive isolation and higher speciation rates in tropical mountains compared to temperate ones. Here we show that tropical and temperate montane stream insects have diverged in thermal tolerance and dispersal capacity, two key traits that are drivers of isolation in montane populations. Tropical species in each of three insect clades have markedly narrower thermal tolerances and lower dispersal than temperate species, resulting in significantly greater population divergence, higher cryptic species diversity, higher tropical speciation rates, and greater accumulation of species over time. Our study also indicates that tropical montane species, with narrower thermal tolerance and reduced dispersal ability, will be especially vulnerable to rapid climate change.