Many biodiversity studies focus on explaining high tropical species richness, but an equally dramatic yet understudied pattern involves the divergent richness of land, sea, and freshwater. Here, we reveal the origins of these richness differences among habitats across animals and plants. Most plant and animal species are terrestrial, although these habitats cover only ~28% of Earth’s surface. Marine habitats have fewer species over a larger area (~70%). Freshwater habitats have relatively high richness and exceptional phylogenetic diversity given their tiny area (2%). The relative richness of habitats is related to variation in diversification rates. Based on ancestral reconstructions of habitat, we find that most marine species are descended from marine ancestors and most terrestrial species from freshwater ancestors. Yet, most extant animal richness in freshwater is derived from terrestrial ancestors. Overall, our results reveal the origins of fundamental but neglected biodiversity patterns and highlight the conservation importance of freshwater habitats.