Cyperaceae tribe Cariceae is characterized by both species richness and habitat diversity, making it an ideal system to study ecological specialization and niche differentiation. We present a phylogenetic hypothesis for the tribe based on nuclear and chloroplast DNA sequence comparisons (ETS-1f, ITS, trnL intron, trnL-trnF intergenic spacer) for 140 representative species from five continents, and use this hypothesis to suggest patterns of both niche conservatism and niche differentiation, particularly within the large subgenus Carex. We identify a new major clade, comprising forest species of East Asian Carex section Siderostictae (subgenus Carex) as sister to the rest of tribe Cariceae. Within Carex subgenus Carex, species tolerant of water-saturated habitats occur in only a few, apparently derived groups, with varying species richness. Clades of predominantly wetland species tend to have broad geographic distribution, often with sister species on different continents, suggesting recent dispersal. In contrast, species within several clades are predominantly forest specialists with distinct Asian and North American lineages. Niche segregation along environmental gradients, such as soil moisture or acidity, is quite common among closely related wetland species, but more difficult to demonstrate within upland forest groups. More complete sampling of species within both wetland and forest groups, combined with comparable sampling of environmental preferences and testing against null models, will be needed for more rigorous exploration of the observed patterns.