Species occurring in unconnected, but similar habitats and under similar selection pressures often display strikingly comparable morphology, behaviour and life history. On island archipelagos where colonizations and extinctions are common, it is often difficult to separate whether similar traits are a result of in situ diversification or independent colonization without a phylogeny. Here, we use one of Hawaii's most ecologically diverse and explosive endemic species radiations, the Hawaiian fancy case caterpillar genus Hyposmocoma, to test whether in situ diversification resulted in convergence. Specifically, we examine whether similar species utilizing similar microhabitats independently developed largely congruent larval case phenotypes in lineages that are in comparable, but isolated environments. Larvae of these moths are found on all Hawaiian Islands and are characterized by an extraordinary array of ecomorphs and larval case morphology. We focus on the ‘purse cases’, a group that is largely specialized for living within rotting wood. Purse cases were considered a monophyletic group, because morphological, behavioural and ecological traits appeared to be shared among all members. We constructed a phylogeny based on nuclear and mitochondrial DNA sequences from 38 Hyposmocoma species, including all 14 purse case species and 24 of non-purse case congeners. Divergence time estimation suggests that purse case lineages evolved independently within dead wood and developed nearly identical case morphology twice: once on the distant Northwest Hawaiian Islands between 15.5 and 9 Ma and once on the younger main Hawaiian Islands around 3.0 Ma. Multiple ecomorphs are usually found on each island, and the ancestral ecomorph of Hyposmocoma appears to have lived on tree bark. Unlike most endemic Hawaiian radiations that follow a clear stepwise progression of colonization, purse case Hyposmocoma do not follow a pattern of colonization from older to younger island. We postulate that the diversity of microhabitats and selection from parasitism/predation from endemic predators may have shaped case architecture in this extraordinary endemic radiation of Hawaiian insects.