The idea that hybridization promotes range expansion has received recent attention, but support from field studies is limited. We hypothesized that in the cladoceran waterflea genus Daphnia, parental species are geographically and ecologically separated, whereas hybrids occupy intermediate or occasionally extreme environments, potentially facilitating range expansion of parental species. We assessed the distribution of Daphnia dentifera, Daphnia galeata and their interspecific hybrids across 44 lakes in China (using mitochondrial and microsatellite markers), and related it to geographical and environmental lake descriptors. Parental species were geographically separated: D. dentifera occurred in western and central China, and D. galeata in eastern and central China, whereas hybrids were found in the western and central parts of the country. However, after controlling for geographical differences, the effect of environment on species distribution was strong and significant. Specifically, D. dentifera was present in high‐altitude oligotrophic lakes, D. galeata in low‐altitude eutrophic lakes and hybrids at intermediate to high altitudes, mainly in mesotrophic lakes. Microsatellite data indicated that hybrids were locally produced rather than having migrated from elsewhere; they probably resulted from encounters between expanding D. galeata and resident D. dentifera. The present study provides evidence that hybrids can survive in habitats that are otherwise suitable for only one of their parental species, emphasizing the importance of hybridization in expansion of species gene pools.