Nest location is one of the key components of avian reproduction and sharp transitions between different nest location strategies may have profound ecological and evolutionary consequences. Here, we used a phylogenetically-informed comparative framework to reconstruct the evolution of ground nesting behaviour in passerine birds, quantify its biogeographical and habitat variation, and test for its associations with life history traits. Our dataset comprised over 1600 species distributed worldwide and representing ca. 90% of all extant passerine families. Our analyses revealed a scattered phylogenetic distribution and moderate phylogenetic signal in the occurrence of ground nesting in passerines. We also found relatively high forward and backward transitions rates between character states of ground and non-ground nesting, indicating strong evolutionary lability. Non-ground nesting was identified as a likely ancestral state at the root of passerine phylogeny. Occurrence of ground nesting was clearly associated with habitat variation, as open habitats generally supported greater proportion of ground nesting species than non-open habitats (forests). Within the major habitat categories we found greater proportion of ground nesters in boreal and temperate than subtropical and tropical zones. This reflected a general latitudinal gradient in the occurrence of ground nesting, with higher proportion of ground nesting species at higher latitudes (especially at the northern hemisphere). Ground nesting was also associated with fast life histories, as ground nesters had larger clutches, shorter incubation periods and faster chick development rates than non-ground nesters. This variation was possibly driven by higher predation rates on nestlings and adult birds in ground nesting species. Our study lays a foundation for a comprehensive understanding of mechanisms and processes that have driven macroevolution of ground nesting behaviour in the most species-rich extant avian lineage.