Thamnochortus (ca. 32 species) is an ecologically diverse genus of Restionaceae. Restionaceae comprise a major component of the southern African Cape flora, wherein eco-diversification might have been important in the generation of high levels of species richness. In an attempt to reconstruct the macroecological history of Thamnochortus, it was found that standard procedures for character state optimization make two inappropriate assumptions. The first is that ancestors are monomorphic (i.e., ecologically uniform) and the second is that eco-diversification follows, or is slower than, lineage diversification. We demonstrate a variety of coding schemes with which the assumption of monomorphy can be avoided. For unordered discrete ecological characters, presence coding and generalized frequency coding (GFC) are suboptimal because they occasionally yield illogical assignments of no state to ancestors. Polymorphism coding or use of the program DIVA are preferable in this respect but are applicable only with parsimony. For continuous eco-characters (e.g., a rainfall gradient, where individual species occur in ranges), GFC and MaxMin coding provide equally valid solutions to optimizing ranges with parsimony. However, MaxMin can be extended to likelihood approaches and is therefore preferable. With respect to rates and timing, all algorithms currently employed for ancestral ecology reconstruction bias toward slow rates of eco-diversification relative to lineage diversification. An alternative to this bias is provided by DIVA, which biases toward accelerated rates of eco-diversification and thus inferences of ecology-driven speciation. We see no way of choosing between these biases; however, phylogeneticists should be aware of them. Applying these methods to Thamnochortus, we find there to be important differences in details, yet general congruence, regarding the historical ecology of this clade. We infer the most recent common ancestor of Thamnochortus to have been a post-fire resprouting species distributed on rocky, well-drained, sandstone-derived soils at lower-middle elevations, in regions of moderate levels of yearly (primarily winter) rainfall. This species would have been distributed in habitats much like those of the southwestern Cape mountains today. Major ecological trends include shifts to lower rainfall regimes and shifts from sandstone to limestone-derived alkaline soils at lower altitudes.