Crassulacean acid metabolism (CAM) photosynthesis is an adaptation to water and atmospheric CO2 deficits that has been linked to diversification in dry-adapted plants. We investigated whether CAM evolution can be associated with the availability of new or alternative niches, using Eulophiinae orchids as a case study. Carbon isotope ratios, geographical and climate data, fossil records and DNA sequences were used to: assess the prevalence of CAM in Eulophiinae orchids; characterize the ecological niche of extant taxa; infer divergence times; and estimate whether CAM is associated with niche shifts. CAM evolved in four terrestrial lineages during the late Miocene/Pliocene, which have uneven diversification patterns. These lineages originated in humid habitats and colonized dry/seasonally dry environments in Africa and Madagascar. Additional key features (variegation, heterophylly) evolved in the most species-rich CAM lineages. Dry habitats were also colonized by a lineage that includes putative mycoheterotrophic taxa. These findings indicate that the switch to CAM is associated with environmental change. With its suite of adaptive traits, this group of orchids represents a unique opportunity to study the adaptations to dry environments, especially in the face of projected global aridification.