Sympatric speciation is often proposed to account for species-rich adaptive radiations within lakes or islands, where barriers to gene flow or dispersal may be lacking. However, allopatric speciation may also occur in such situations, especially when ranges are fragmented by fluctuating water levels. We test the hypothesis that Miocene fragmentation of Cuba into three palaeo-archipelagos accompanied species-level divergence in the adaptive radiation of West Indian Anolis lizards. Analysis of morphology, mitochondrial DNA (mt DNA) and nuclear DNA in the Cuban green anoles (carolinensis subgroup) strongly supports three predictions made by this hypothesis. First, three geographical sets of populations, whose ranges correspond with palaeo-archipelago boundaries, are distinct and warrant recognition as independent evolutionary lineages or species. Coalescence of nuclear sequence fragments sampled from these species and the large divergences observed between their mtDNA haplotypes suggest separation prior to the subsequent unification of Cuba ca. 5 Myr ago. Second, molecular phylogenetic relationships among these species reflect historical geographical relationships rather than morphological similarity. Third, all three species remain distinct despite extensive geographical contact subsequent to island unification, occasional hybridization and introgression of mtDNA haplotypes. Allopatric speciation initiated during partial island submergence may play an important role in speciation during the adaptive radiation of Anolis lizards.