Conspicuous colors (e.g. red, yellow, blue) have evolved numerous times across animals. But the function of this coloration can differ radically among species. Many species use this coloration as a sexual signal to conspecifics, whereas others use it as a warning signal to predators. Why do different species evolve conspicuous coloration in association with one function as opposed to the other? We address this question in terrestrial vertebrates (tetrapods) using phylogenetic approaches and test whether day-night activities of species help determine these patterns. Using phylogenetic logistic regression, we found that conspicuous, sexually dimorphic coloration is significantly associated with diurnal lineages (e.g. many birds and lizards). By contrast, the evolution of warning signals was significantly associated with large-scale clades that were ancestrally nocturnal (e.g. snakes, amphibians), regardless of the current diel activity of species. Overall, we show that the evolution of conspicuous coloration as warning signals or sexual signals is influenced by the ecology of species, both recently and in the ancient past.