Phenotypic plasticity (the ability of a single genotype to produce multiple phenotypes in response to variation in the environment) is commonplace. Yet its evolutionary significance remains controversial, especially in regard to whether and how it impacts diversification and speciation. Here, we review recent theory on how plasticity promotes: (i) the origin of novel phenotypes, (ii) divergence among populations and species, (iii) the formation of new species and (iv) adaptive radiation. We also discuss the latest empirical support for each of these evolutionary pathways to diversification and identify potentially profitable areas for future research. Generally, phenotypic plasticity can play a largely underappreciated role in driving diversification and speciation. Copyright (c) 2010 Elsevier Ltd. All rights reserved.