The relationship between habitat complexity and species richness is well established but comparatively little is known about the evolution of morphological diversity in complex habitats. Reefs are structurally complex, highly productive shallow-water marine ecosystems found in tropical (coral reefs) and temperate zones (rocky reefs) that harbor exceptional levels of biodiversity. We investigated whether reef habitats promote the evolution of morphological diversity in the feeding and locomotion systems of grunts (Haemulidae), a group of predominantly nocturnal fishes that live on both temperate and tropical reefs. Using phylogenetic comparative methods and statistical analyses that take into account uncertainty in phylogeny and the evolutionary history of reef living, we demonstrate that rates of morphological evolution are faster in reef-dwelling haemulids. The magnitude of this effect depends on the type of trait; on average, traits involved in the functional systems for prey capture and processing evolve twice as fast on reefs as locomotor traits. This result, along with the observation that haemulids do not exploit unique feeding niches on reefs, suggests that fine-scale trophic niche partitioning and character displacement may be driving higher rates of morphological evolution. Whatever the cause, there is growing evidence that reef habitats stimulate morphological and functional diversification in teleost fishes.