The fluvicoline New World flycatchers (subfamily Fluvicolinae, family Tyrannidae) inhabit a broad range of forest and non-forest habitats in all parts of the New World. Using a densely sampled phylogeny we depict the diversification and expansion of this group in time and space. We provide evidence that a shift in foraging behaviour allowed the group to rapidly expand in a wide range of tropical and subtropical habitats in South America. The results support that four main clades expanded into and specialized to distinct habitats and climates (closed to open, and warm to cold), respectively, and subsequently underwent vicariant speciation within their respective ecoregions. The group soon reached a significant species diversity over virtually all of South and North America, and with parallel trajectories of speciation slow-down in all four clades. The genus Muscisaxicola is an exception, as it invaded the most inhospitable and barren environments in the Andes where they underwent rapid diversification in the Plio-Pleistocene.