The importance of the formation of the Panamanian land bridge for mammalian diversification in the New World is well documented; however, studies investigating the role of this land bridge in avian diversification have only recently been reported. We used mitochondrial DNA data to reconstruct the phylogeny of a group of lowland tanagers (Thraupidae) that contains species distributed in both Central America and South America. Phylogenetic analyses identified a clade that includes all 26 species in the genera Tachyphonus, Ramphocelus, Eucometis, Lanio, Trichothraupis, Coryphospingus, and Rhodospingus. Three of these species (Rhodospingus cruentus, Coryphospingus cucullatus, and C. pileatus) have traditionally been classified with the finches (Emberizidae); here, we show that they are tanagers. The genus Tachyphonus is polyphyletic, with some species more closely related to species in the genus Ramphocelus than they are to other Tachyphonus. The ancestor of the entire clade was distributed in South America or was widespread there and in Central America. Reconstructing the biogeographic history of this group showed a dispersal bias from South America to Central America. Nine dispersal events were inferred, and eight of these involve dispersals from South America to Central America. Temporally, most dispersal events coincide with or postdate the final formation of the Panamanian isthmus. We also used our phylogeny to investigate plumage evolution. Two species are sexually monochromatic, and this condition was derived from sexual dichromatism through the evolution of more colorful female plumage. Although 11 species in the clade have crests, this feature evolved no more than twice within the group.