Bursts in species diversification are well documented among animals and plants, yet few studies have assessed recent adaptive radiations of eukaryotic microbes. Consequently, we examined the radiation of the most ecologically dominant group of endosymbiotic dinoflagellates found in reef-building corals, Symbiodinium Clade C, using nuclear ribosomal (ITS2), chloroplast (psbAncr), and multilocus microsatellite genotyping. Through a hierarchical analysis of high-resolution genetic data, we assessed whether ecologically distinct Symbiodinium, differentiated by seemingly equivocal rDNA sequence differences, are independent species lineages. We also considered the role of host specificity in Symbiodinium speciation and the correspondence between endosymbiont diversification and Caribbean paleo-history. According to phylogenetic, biological, and ecological species concepts, Symbiodinium Clade C comprises many distinct species. Although regional factors contributed to population-genetic structuring of these lineages, Symbiodinium diversification was mainly driven by host specialization. By combining patterns of the endosymbiont's host specificity, water depth distribution, and phylogeography with paleo-historical signals of climate change, we inferred that present-day species diversity on Atlantic coral reefs stemmed mostly from a post-Miocene adaptive radiation. Host-generalist progenitors spread, specialized, and diversified during the ensuing epochs of prolonged global cooling and change in reef-faunal assemblages. Our evolutionary reconstruction thus suggests that Symbiodinium undergoes “boom and bust” phases in diversification and extinction during major climate shifts.