Recent research suggests that environmental or habitat specialization among plants may be less common than previously thought. These findings need to be reconciled with interpretations of community-level similarity analyses that emphasize a strong role for specialization. Here we examine specialization within a taxonomic group that, owing to their widespread use as environmental indicators, should provide ample supportive evidence of specialization: freshwater sediment diatoms. Using an ideal, 239-lake survey data set that reliably represents the environmental conditions among c. 9500 north-eastern US lakes (encompassing a c. 405 000 km2 region), we show that only 29 and 14% of 401 species (those occurring in at least two lakes) exhibited narrower pH and total phosphorus niche breadths, respectively, than expected from the random occupation of lakes. These rates increase slightly using more stringent species-inclusion criteria. Highly significant correlations between compositional and environmental resemblance matrices are shown to reflect a balance between a strong signal generated by the minority specialists, and noise generated by the majority generalists.