Present patterns of diversity in the Australian flora have been shaped by increasing seasonality since the Eocene, and by pronounced aridification in the past 3 million years. Arid-zone plants are commonly hypothesised to be the products of radiations of ancestrally temperate or coastal lineages, as in the case of the everlasting paper daisy tribe Gnaphalieae (Asteraceae). However, these inferences are often based on higher-level phylogenies, whereas evolutionary processes in the Australian Gnaphalieae have rarely been studied at the species level. Here, we reconstructed the phylogeny and biogeographic history of the small, but ecologically diverse, paper daisy genus Leucochrysum, to examine recent habitat shifts and character changes, at the same time exploring the feasibility of using amplicon sequencing of low-copy nuclear gene regions to resolve phylogenetic relationships in Australian Gnaphalieae. On the balance of evidence, outgroup comparison and ancestral-area reconstruction support an ancestral range in the arid zone with subsequent diversification towards the south-east, demonstrating a complex evolutionary history with a re-colonisation of temperate areas. Low amplification success rates suggest that methods other than amplicon sequencing of currently available primers will be more promising for molecular phylogenetic work at a larger scale.