The unrivalled level of biodiversity across the tropical Indo-Australian Archipelago (IAA) has been the subject of wide debate. Attempts to understand its origins have focussed on the timing of speciation, rates of diversification and the directionality of colonisation across geographical and climatic gradients in an array of marine groups. We investigate origins and evolution in the Choerodon tuskfishes, a group of labrids whose centre of diversity coincides with this region. Mitochondrial (COI, 16S) and nuclear (RAG2, Tmo4c4) molecular phylogenies and biogeographic analyses, coupled with molecular clock dating, were inferred from 19 of the 23 valid Choerodon species. Two additional, undescribed Choerodon species were also included, showing reciprocal monophyly in both genomes, confirming their species level status. Choerodon diverged from their ancestral sister group, the Odacines, at the onset of the Miocene, coinciding with the collision of the Australian and Eurasian Plates when extensive areas of shallow-water habitat formed. Despite subsequent evolutionary patterns being partially obscured by overlapping distribution ranges between many species and a lack of clear evidence for climatically driven lineage divergences, our data support an evolutionary scenario of peripheral endemics budding from once widespread populations across this biodiversity hotspot. Interestingly, these peripheral endemics tend to occupy more specialised reef or non-reef habitats whereas widespread groups appear to generally take advantage of both reef and non-reef environments. Our results are discussed in light of the most accredited hypotheses proposed to explain species richness in the IAA, with some support for processes such as centrifugal speciation.