Terrestrial biodiversity is dominated by plants and the herbivores that consume them, and they are one of the major conduits of energy flow up to higher trophic levels. Here, we address the processes that have generated the spectacular diversity of flowering plants (>300,000 species) and insect herbivores (likely >1 million species). Long-standing macroevolutionary hypotheses have postulated that reciprocal evolution of adaptations and subsequent bursts of speciation have given rise to much of this biodiversity. We critically evaluate various predictions based on this coevolutionary theory. Phylogenetic reconstruction of ancestral states has revealed evidence for escalation in the potency or variety of plant lineages' chemical defenses; however, escalation of defense has been moderated by tradeoffs and alternative strategies (e.g., tolerance or defense by biotic agents). There is still surprisingly scant evidence that novel defense traits reduce herbivory and that such evolutionary novelty spurs diversification. Consistent with the coevolutionary hypothesis, there is some evidence that diversification of herbivores has lagged behind, but has nevertheless been temporally correlated with that of their host-plant clades, indicating colonization and radiation of insects on diversifying plants. However, there is still limited support for the role of host-plant shifts in insect diversification. Finally, a frontier area of research, and a general conclusion of our review, is that community ecology and the long-term evolutionary history of plant and insect diversification are inexorably intertwined.coevolution ͉ herbivory ͉ insect host range ͉ phylogenetic analyses ͉ plant defense theory