Using phylogeny-based methods to identify evolutionary transitions has become an integral part of evolutionary biology. Here, we demonstrate the potential for these methods to give statistically well-supported but misleading inferences about character evolution. We also show how inferences of character evolution can be informed using GIS-based methods to reconstruct ancestral environmental regimes. We reconstruct a phylogeny for marsupial frogs (Hemiphractidae) using nuclear and mitochondrial DNA sequences and estimate patterns of life-history evolution across the resulting tree. We find that Gastrotheca species with complex life cycles (i.e., egg, tadpole, and adult stages) are phylogenetically nested among species and genera with direct development (i.e., egg and adult stages only). Assuming a single rate for gains and losses in likelihood reconstructions, there is strong statistical support for the hypothesis that the tadpole stage was lost early in the phylogeny but reappeared within Gastrotheca. Assuming different rates of gain and loss, the model with significantly higher statistical support, the tadpole stage seems to have been lost multiple times but never regained. Given that both hypotheses cannot be correct, at least one reconstruction model must be giving well-supported but misleading results. Several lines of evidence (including GIS-based reconstructions of the ancestral climatic regime) suggest that the former hypothesis is correct, and that the tadpole stage has evolved from direct development within Gastrotheca, the only known case of such a reversal in frogs.