Madagascar is surrounded by archipelagos varying widely in origin, age and structure. Although small and geologically young, these archipelagos have accumulated disproportionate numbers of unique lineages in comparison to Madagascar, highlighting the role of waif-dispersal and rapid in situ diversification processes in generating endemic biodiversity. We reconstruct the evolutionary and biogeographical history of the genus Psiadia (Asteraceae), a plant genus with near equal numbers of species in Madagascar and surrounding islands. Analyzing patterns and processes of diversification, we explain species accumulation on peripheral islands and aim to offer new insights on the origin and potential causes for diversification in the Madagascar and Indian Ocean Islands biodiversity hotspot. Our results provide support for an African origin of the group, with strong support for non-monophyly. Colonization of the Mascarenes took place by two evolutionary distinct lineages from Madagascar, via two independent dispersal events, each unique for their spatial and temporal properties. Significant shifts in diversification rate followed regional expansion, resulting in co-occurring and phenotypically convergent species on high-elevation volcanic slopes. Like other endemic island lineages, Psiadia have been highly successful in dispersing to and radiating on isolated oceanic islands, typified by high habitat diversity and dynamic ecosystems fuelled by continued geological activity. Results stress the important biogeographical role for Rodrigues in serving as an outlying stepping stone from which regional colonization took place. We discuss how isolated volcanic islands contribute to regional diversity by generating substantial numbers of endemic species on short temporal scales. Factors pertaining to the mode and tempo of archipelago formation and its geographical isolation strongly govern evolutionary pathways available for species diversification, and the potential for successful diversification of dispersed lineages, therefore, appears highly dependent on the timing of arrival, as habitat and resource properties change dramatically over the course of oceanic island evolution.