The taxonomic uncertainty surrounding several prominent genera of Australian microbat has been a long-standing impediment to research and conservation efforts on these groups. The free-tail bat genus Mormopterus is perhaps the most significant example, with a long history of acknowledged species-level confusion. This study uses a combined molecular and morphological approach to conduct a comprehensive assessment of species and subgeneric boundaries, between-species phylogenetic affinities and within-species phylogeographic structure in Australian members of Mormopterus. Phylogenetic analyses based on 759 base pairs of the NADH Dehydrogenase subunit 2 mitochondrial gene were concordant with species boundaries delineated using an expanded allozyme dataset and by phallic morphology, and also revealed strong phylogeographic structure within two species. The levels of divergence evident in the molecular and morphological analyses led us to recognise three subgenera within Australia: Micronomus, Setirostris subgen. nov. and Ozimops subgen. nov. Within Ozimops we recognise seven Australian species, three of which are new, and none are conspecific with Indo-Papuan species. The family Molossidae now comprises eleven species across three subgenera in Australia, making it the continent’s second most speciose family of bats.