In this study, we sequenced one nuclear and three mitochondrial DNA loci to construct a robust estimate of phylogeny for all available species of Tetanocera. Character optimizations suggested that aquatic habitat was the ancestral condition for Tetanocera larvae, and that there were at least three parallel transitions to terrestrial habitat, with one reversal. Maximum likelihood analyses of character state transformations showed significant correlations between habitat transitions and changes in four larval morphological characteristics (cuticular pigmentation and three characters associated with the posterior spiracular disc). We provide evidence that phylogenetic niche conservatism has been responsible for the maintenance of aquatic-associated larval morphological character states, and that concerted convergence and/or gene linkage was responsible for parallel morphological changes that were derived in conjunction with habitat transitions. These habitat-morphology associations were consistent with the action of natural selection in facilitating the morphological changes that occurred during parallel aquatic to terrestrial habitat transitions in Tetanocera.