The genus Craterocephalus is one of the 11 genera within the family Atherinidae. It is the only genus in the family that has undergone an extensive radiation within freshwater habitats. Five species groups are represented within the genus, with 18 species found in Australia, six in New Guinea and one in East Timor. Craterocephalus is the equal fourth most widespread genus in Australian freshwater environments (occurring in 21 out of 31 biogeographic regions), and the most speciose (13 species). This allows identification of broad biogeographic patterns that can later be contrasted with other groups that overlap geographically. Phylogenetic relationships of Craterocephalus were examined using the cytochrome b gene. Results confirmed the monophyly of five species groups, with the marine ‘‘new honoriae” group being basal, suggesting a single invasion of freshwater habitats. The ‘‘capreoli” group and one species, C. munroi represents reversals back into marine/estuarine conditions. The most striking result from this study is the degree of differentiation between species in the separate freshwater groups within Craterocephalus. Despite often occurring sympatrically in river systems, interspecies and population divergences from ‘‘eyresii” and ‘‘stramineus” groups were substantially larger than divergences within ‘‘stercusmuscarum.” Despite being one of the best freshwater groups characterized morphologically within Australia, it is clear that additional morphological work is required to clarify taxonomic problems within Craterocephalus, as molecular data suggest some species are synonymous, while others appear to represent multiple unrecognized taxa.