We present the first molecular phylogenetic hypothesis for Knipolegus (black-tyrants), a widespread genus of South American tyrant-flycatchers, based on nuclear and mitochondrial DNA sequences. Bayesian and maximum-likelihood analyses support three clades within Knipolegus, one confined to northern South America, one confined to southeast Brazil, and one confined to the Southern Cone and southern Andes. Within each clade, two or more species are broadly sympatric or parapatric, overlapping in general distribution but differing in habitat specialization. Maximum-likelihood ancestral state reconstructions using an equal-rate stochastic model support a single origin of austral migration in the southern group. Contrasting with these strong geographic patterns, ancestral state reconstructions of plumage and display evolution were more complex, with multiple inferred character-state changes. Ancestral state reconstructions suggest a sexually dimorphic ancestor of Knipolegus, and sexually similar plumages are the result of three independent character-state changes: one in male plumage and two in female plumage. Ancestral state reconstructions support the conclusion that flight displays with mechanical sounds originated in the Knipolegus ancestor, and loss of mechanical sounds in flight displays occurred twice.