Environmental heterogeneity is considered as one of the main drivers of habitat specialization and niche evolution among tropical plant lineages, and local-scale habitat specialization promotes niche differentiation among sister taxa. In this study, we examined the degree to which habitat specialization leads to niche differentiation across the distribution range of a given species using five species of the family Myristicaceae native to Western Ghats, India, as an example. In the Western Ghats, Myristicaceae species occur in two main habitat types, namely, freshwater swamps (flooded habitat) and terra firme forest (non-flooded habitat), distributed across a seasonal flooding gradient. First, we reconstructed the evolutionary history of flooded habitat specialization among global and Western Ghats Myristicaceae by mapping flooded habitat association and traits conferring flood tolerance (e.g., aerial roots) on a dated phylogeny. Then, we investigated climatic niche differences among lineages occupying flooded and terra firme habitats using occurrence data and environmental variables. Our analysis revealed swampy habitat occurrence as the probable ancestral state with subsequent speciation events leading to adaptation to non-swampy habitats. We also show that traits conferring flood tolerance have evolved independently several times during the evolution of Myristicaceae. Furthermore, phylogenetically distantly related Myristicaceae taxa occupying different habitats (flooded and terra firme habitat) in Western Ghats show significant niche divergence. Overall, the repeated gain of swampy habitat specialization and associated morphological traits and evidence for habitat-associated climatic niche divergence among Myristicaceae taxa suggest that seasonal flooding may have been an important driver of ecological diversification in this primitive plant family.