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Tropical biotas provide excellent settings in which to explore mechanisms of evolutionary diversification, yet these processes remain poorly understood. Pioneering work on biodiversity patterns and diversification processes in other tropical regions has recently been complemented by studies in Madagascar. Here we review diversity models and diversification mechanisms proposed for the fauna of this island and the perspectives for testing them. Madagascar has a diverse biota that has evolved in isolation, and is characterised by regionally pronounced and locally steep environmental gradients, common patterns of microendemism across taxa and numerous evolutionary radiations. These characteristics establish Madagascar as a promising system for the study of pattern and process in species diversification.