Australia and New Guinea (together referred to as Sahul) were linked by land for much of the late Tertiary and share many biotic elements. However, New Guinea is dominated by rainforest, and northern Australia by savannah. Resolving patterns of biotic interchange between these two regions is critical to understanding the expansion and contraction of both habitat types. The green tree frog (Litoria caerulea) has a vast range across northern and eastern Australia and New Guinea. An assessment of mitochondrial and morphological diversity in this nominal taxon in New Guinea reveals two taxa. True Litoria caerulea occurs in disjunct savannahs of the Trans-Fly, Central Province and across northern Australia, with very low genetic divergence, implying late Pleistocene connectivity. A previously unrecognised taxon is endemic to New Guinea and widespread in lowland swampy rainforest. Date estimates for the divergence of the new species suggest Pliocene connectivity across lowland tropical habitats of northern Australia and New Guinea. In contrast, the new species shows shallow phylogeographic structuring across the central mountains of New Guinea, implying recent dispersal between the northern and southern lowlands. These results emphasise that the extent and connectivity of lowland rainforest and savannah environments across northern Australia and southern New Guinea have undergone profound shifts since the late Pliocene.