Many features of species’ biology, including life history, physiology, morphology, and ecology are tightly linked to body size. Investigation into the causes of size divergence is therefore critical to understanding the factors shaping phenotypic diversity within clades. In this study, we examined size evolution in monitor lizards (Varanus), a clade that includes the largest extant lizard species, the Komodo dragon (V. komodoensis), as well as diminutive species that are nearly four orders of magnitude smaller in adult body mass. We demonstrate that the remarkable body size disparity of this clade is a consequence of different selective demands imposed by three major habitat use patterns—arboreality, terrestriality, and rock-dwelling. We reconstructed phylogenetic relationships and ancestral habitat use and applied model selection to determine that the best-fitting evolutionary models for species’ adult size are those that infer oppositely directed adaptive evolution associated with terrestriality and rock-dwelling, with terrestrial lineages evolving extremely large size and rock-dwellers becoming very small. We also show that habitat use affects the evolution of several ecologically important morphological traits independently of body size divergence. These results suggest that habitat use exerts a strong, multidimensional influence on the evolution of morphological size and shape disparity in monitor lizards.