Climatic and geological changes across time are presumed to have shaped the rich biodiversity of tropical regions. However, the impact climatic drying and subsequent tropical rainforest contraction had on speciation has been controversial because of inconsistent palaeoecological and genetic data. Despite the strong interest in examining the role of climatic change on speciation in the Neotropics there has been few comparative studies, particularly, those that include non-rainforest taxa. We used bird species that inhabit humid or dry habitats that dispersed across the Panamanian Isthmus to characterize temporal and spatial patterns of speciation across this barrier. Here, we show that these two assemblages of birds exhibit temporally different speciation time patterns that supports multiple cycles of speciation. Evidence for these cycles is further corroborated by the finding that both assemblages consist of 'young' and 'old' species, despite dry habitat species pairs being geographically more distant than pairs of humid habitat species. The matrix of humid and dry habitats in the tropics not only allows for the maintenance of high species richness, but additionally this study suggests that these environments may have promoted speciation. We conclude that differentially expanding and contracting distributions of dry and humid habitats was probably an important contributor to speciation in the tropics.