Competition is often thought to promote ecological diversification and thereby to facilitate the coexistence of competitors during evolutionary radiations. At large spatial scales, species may also coexist by having allopatric distributions, which raises the question about the role of range expansion in the proliferation of species during radiations. Here, we integrate a well-sampled (50 out of 74 species) and timed phylogeny of Nanos and Apotolamprus dung beetles (Canthonini) in Madagascar with data on species’ geographical ranges, abundances, and body sizes. There is an overall decline in lineage accumulation through time since the colonization of northern Madagascar in the mid Miocene (24 to 13 Ma). A clade of 24 extant Nanos species (clade L) originating 6.0 Ma exhibits a secondary increase in speciation rate, which is associated with a significant increase in body size and strikingly allopatric distributions of the species. Large body size typically confers a competitive advantage in dung beetles, which is here reflected by strong numerical dominance of clade L species in local communities. We suggest that the ‘key innovation’ of large body size has allowed range expansion due to competitive release, which has created extensive opportunities for allopatric speciation and differentiation along environmental gradients. Most theories to explain diversification patterns in Madagascar rely on allopatric modes of speciation, but they fail to explain how ancestral species became widespread in the first place. The mechanism proposed here, involving range expansion following competitive release via a “key innovation”, may have operated in other Malagasy taxa with large numbers of species with small geographic ranges.