Species diversification often results from divergent evolution of ecological or social signaling traits. Theoretically, a combination of the two may promote speciation, however, empirical examples studying how social signal and ecological divergence might be involved in diversification are rare in general and typically do not consider range overlap as a contributing factor. We show that ecologically distinct lineages within the Australian sand dragon species complex (including Ctenophorus maculatus, Ctenophorus fordi, and Ctenophorus femoralis) have diversified recently, diverging in ecologically relevant and social signaling phenotypic traits as arid habitats expanded and differentiated. Diversification has resulted in repeated and independent invasion of distinct habitat types, driving convergent evolution of similar phenotypes. Our results suggest that parapatry facilitates diversification in visual signals through reinforcement as a hybridization-avoidance mechanism. We show that particularly striking variation in visual social signaling traits is better explained by the extent of lineage parapatry relative to ecological or phylogenetic divergence, suggesting that these traits reinforce divergence among lineages initiated by ecologically adaptive evolution. This study provides a rare empirical example of a repeated, intricate relationship between ecological and social signal evolution during diversification driven by ecological divergence and the evolution of new habitats, thereby supporting emergent theories regarding the importance of both ecological and social trait evolution throughout speciation.