Switches from migratory (diadromous) to nonmigratory (freshwater) life histories are known to have occurred repeatedly in some aquatic taxa. However, the significance of the loss of diadromy as an initiator for speciation remains poorly understood. The rivers of New Zealand's South Island house a species flock of recently derived nonmigratory galaxiid fishes known as the Galaxias vulgaris complex. Members of this complex are morphologically and genetically similar to the diadromous G. brevipinnis found in New Zealand and southeastern Australia. We hypothesised that South Island's G. vulgaris complex (at least 10 nonmigratory lineages) represents a number of independent radiations from a migratory G. brevipinnis stock, with repeated loss of diadromy. Sequence data were obtained for 31 ingroup samples (G. vulgaris complex and G. brevipinnis) plus four outgroup taxa. A well-resolved phylogeny based on 5039 base pairs of the mitochondrial genome suggests that diadromy has been lost on three separate occasions. Thus, speciation in these galaxiid fishes is partly an incidental phenomenon caused by switches from diadromous to nonmigratory strategies. However, much of the subsequent nonmigratory diversity is monophyletic, suggesting that drainage evolution (vicariance) has also played a major role in cladogenesis. Levels of sequence divergence among major ingroup lineages (1.6–12.7%) suggest that the radiation is considerably older relative to Northern Hemisphere (postglacial) complexes of salmonid, osmerid, and gasterosteid fishes. Sympatric taxa are not monophyletic, suggesting that their coexistence reflects secondary contact rather than sympatric speciation. The monophyly of New Zealand G. brevipinnis is well supported, but both mitochondrial DNA and nuclear sequences indicate that G. brevipinnis is paraphyletic on an intercontinental scale. The divergence (maximum 11.5%) between Tasmanian and New Zealand G. brevipinnis, although large, supports marine dispersal rather than vicariance as the principle biogeographic mechanism on an intercontinental scale.