The South American Dry Diagonal, also called the Diagonal of Open Formations, is a large region of seasonally dry vegetation extending from northeastern Brazil to northern Argentina, comprising the Caatinga, Cerrado, and Chaco subregions. A growing body of phylogeography literature has determined that a complex history of climatic changes coupled with more ancient geological events has produced a diverse and endemic‐rich Dry Diagonal biota. However, the exact drivers are still under investigation, and their relative strengths and effects are controversial. Pleistocene climatic fluctuations structured lineages via vegetation shifts, refugium formation, and corridors between the Amazon and Atlantic forests. In some taxa, older geological events, such as the reconfiguration of the São Francisco River, uplift of the Central Brazilian Plateau, or the Miocene inundation of the Chaco by marine incursions, were more important. Here, we review the Dry Diagonal phylogeography literature, discussing each hypothesized driver of diversification and assessing degree of support. Few studies statistically test these hypotheses, with most support drawn from associating encountered phylogeographic patterns such as population structure with the timing of ancient geoclimatic events. Across statistical studies, most hypotheses are well supported, with the exception of the Pleistocene Arc Hypothesis. However, taxonomic and regional biases persist, such as a proportional overabundance of herpetofauna studies, and the under‐representation of Chaco studies. Overall, both Pleistocene climate change and Neogene geological events shaped the evolution of the Dry Diagonal biota, though the precise effects are regionally and taxonomically varied. We encourage further use of model‐based analyses to test evolutionary scenarios, as well as interdisciplinary collaborations to progress the field beyond its current focus on the traditional set of geoclimatic hypotheses.