AbstractAimTo test two prominent, alternate hypotheses that provide explanations for the great accumulation of endemic species in the Kimberley bioregion in north‐western Australia, using an extensively sampled, region wide phylogeny of northern Australia's most species‐rich freshwater fish family, Terapontidae. Specifically, we test whether the Kimberley may act as (1) a “museum” accumulating taxa and endemic species over time or (2) a “cradle” of more recent diversification and neoendemism.LocationThe Australian monsoonal tropics.TaxonGrunters (Terapontidae).MethodsWe obtained a robust and well‐supported Bayesian phylogeny for the family using DNA sequences from mtDNA and nuclear gene regions. We performed molecular phylogenetic analyses using species tree methods including molecular dating analysis, ancestral range reconstruction and diversification analysis.ResultsBased on our phylogeny, the combined molecular clock estimates and likelihood‐based historical‐biogeographic reconstructions suggest that terapontids recently transitioned into the Kimberley from the east during the late‐Miocene. We found that 80% of Kimberley terapontids diversified within the Kimberley in the last 3 Ma. Furthermore, diversification analyses identified a single significant shift in diversification rates ~1.4 Ma that corresponds with a change in global climate midway through the Pleistocene that was predominantly driven by speciation in the Kimberley.Main conclusionsThe weight of evidence suggests that the Kimberley has been a “cradle” of evolution for Terapontidae, rather than a “museum”. Our analysis provides strong evidence for a geologically recent transition of terapontids into the Kimberley from regions to the east during the late‐Miocene followed by a significant increase in speciation rates during the Pleistocene, driven by speciation in the Kimberley. The results provide important insight into the evolutionary and biogeographical processes that have shaped the regions unique biota, which will inform land managers working to protect and conserve both species and the processes responsible for generating and sustaining them.