The increasing aridity during the Last Glacial Maximum (LGM) has been proposed as a major factor affecting Neotropical species. The character and intensity of this change, however, remains the subject of ongoing debate. This review proposes an approach to test contrasting paleoecological hypotheses by way of their expected demographic and genetic effects on Neotropical cloud forest species. We reviewed 48 paleoecological records encompassing the LGM in the Neotropics. The records show contrasting evidence regarding the changes in precipitation during this period. Some regions remained fairly moist and others had a significantly reduced precipitation. Many paleoecological records within the same region show apparently conflicting evidence on precipitation and forest stability. From these data, we propose and outline two demographic/genetic scenarios for cloud forests species based on opposite precipitation regimes: the dry refugia and the moist forests hypotheses. We searched for studies dealing with the population genetic structure of cloud forest and other montane taxa and compared their results with the proposed models. To date, the few available molecular studies show insufficient genetic evidence on the predominance of glacial aridity in the Neotropics. In order to disentangle the climatic history of the Neotropics, the present study calls for a general multi-disciplinary approach to conduct future phylogeographic studies. Given the contradictory paleoecological information, population genetic data on Neotropical cloud forest species should be used to explicitly test the genetic consequences of competing paleoecological models.