The Indo-Malay-Philippine (IMP) biodiversity hotspot, bounded by the Philippines, the Malay Peninsula and New Guinea, is the epicentre of marine biodiversity. Hypotheses to explain the source of the incredible number of species found there include the centre of overlap hypothesis, which proposes that in this region the distinct faunas of the Pacific and Indian Oceans overlap. Here we review the biogeographical evidence in support of this hypothesis. We examined tropical reef fish distributions, paying particular attention to sister species pairs that overlap in the IMP hotspot. We also review phylogeographical studies of wide-ranging species for evidence of lineage divergence and overlap in the IMP region. Our synthesis shows that a pattern of isolation between the Pacific and the Indian Ocean faunas is evident across a wide range of taxa. The occurrence of sister species, with one member in each ocean, indicates that the mechanism(s) of isolation has been in effect since at least the Miocene, while phylogeographical studies indicate more recent divergences in the Pleistocene. Divergence in isolation followed by population expansion has led to an overlap of closely related taxa or genetic lineages in the hotspot, contributing to diversity and species richness in the region. These findings are consistent with the centre of overlap hypothesis and highlight the importance of this process in generating biodiversity within the IMP.