Madagascar is renowned as a global biodiversity hotspot with high levels of microendemism. However, there are few molecular phylogenetic studies of Malagasy birds, particularly for forest-dwelling species, signifying a substantial gap in current measures of species diversity in the absence of genetic data. We evaluated species limits and explored patterns of diversification within the genus Newtonia (Family Vangidae), a group of forest-dwelling songbirds endemic to Madagascar. Our modern systematics approach combined genomic, morphometric, and ecological niche data to analyze the evolutionary history of the group. Our integrative analysis uncovered hidden species-level diversity within N. amphichroa, with two deeply divergent and morphologically distinct lineages isolated in different regions of humid forest. We describe the southern lineage as a new species. Conversely, N. brunneicauda, which we initially hypothesized may harbor cryptic diversity owing to its large distribution spanning a range of habitats, was found to have no distinct lineages and shared haplotypes across much of its distribution. The contrasting diversification patterns between Newtonia lineages may be the result of their elevational tolerances. Newtonia brunneicauda has a broad habitat tolerance and elevational range that appears to have facilitated population expansion and gene flow across the island, limiting opportunities for diversification. On the other hand, N. amphichroa is found predominantly in mid-elevation and montane humid forests, a restriction that appears to have promoted speciation associated with climatic fluctuations during the Pleistocene. Our findings indicate that species diversity of Malagasy forest-dwelling birds may be greater than currently recognized, suggesting an urgent need for further studies to quantify biodiversity in Madagascar’s rapidly disappearing native forests.