Marine biodiversity in the Coral Triangle is several times higher than anywhere else, but why this is true is unknown because of poor historical data. To address this, we compared the first available record of fossil cheilostome bryozoans from Indonesia with the previously sampled excellent record from the Caribbean. These two regions differ several-fold in species richness today, but cheilostome diversity was strikingly similar until the end of the Miocene 5.3 million years ago so that the modern disparity must have developed more recently. However, the Miocene faunas were ecologically very different, with a greater proportion of erect and free-living species in the Caribbean compared to the less well-known Coral Triangle. Our results support the hypothesis that modern differences in diversity arose primarily from differential extinction of Caribbean erect and free-living species concomitant with oceanographic changes due to the uplift of the Isthmus of Panama, rather than exceptional rates of diversification in the Indo-Pacific.