Phylogenetic relationships and species boundaries of Australian burrowing freshwater crayfish belonging to the genera Engaeus, Engaewa, Geocharax, Gramastacus and Tenuibranchiurus are investigated using combined mitochondrial and nuclear DNA sequence data and Bayesian and Maximum Parsimony methods. Phylogenies are statistically compared to previously published hypotheses. Engaeus, Engaewa, Geocharax, Gramastacus and Tenuibranchiurus form a strongly supported monophyletic clade. This grouping is independently supported by morphology but unites geographically highly disjunct lineages. Our data show two cryptic species in Geocharax, one cryptic species in Gramastacus and two cryptic species within the highly divergent Engaeus lyelli lineage. Using a Bayesian relaxed molecular clock method, the 16S rDNA data show generic-level diversification coinciding with the transition from a wet to arid palaeoclimate near the mid Miocene.