<p>The Australian continent underwent a series of dramatic climate changes during the Cenozoic, which impacted the evolutionary history and distribution of many groups of organisms. Up to now, few studies have explored the drivers of diversification and the processes that generated and maintained biodiversity in Australia. Here, we used the Australian endemic Eurepini crickets as a model system to investigate the impact of paleoenvironmental changes on the diversification of Australian lineages with a series of state-of-the-art macroevolutionary models. We inferred an Early Eocene origin of Eurepini in current Northern Australia, with the majority of descendant lineages diversifying in situ. We detected a drastic drop in diversification rate at the beginning of Pleistocene. Diversification rates of Eurepini declined with increasing aridity and decreasing temperature. Diversification rate heterogeneity was linked to contrasting geographic distributions: the arid-adapted lineages diversified at a much lower rate than their mesic-distributed counterparts. The drastic environmental changes that occurred from the Miocene onwards were likely detrimental to dispersal of Eurepini lineages, slowing down their diversification during the Pleistocene. The tribe likely suffered substantial diversity losses in the arid zone during progressive aridification of Australia. Our study highlights the importance of paleoenvironmental changes in shaping diversification dynamics of Australian lineages.</p>