The semiaquatic platypus and terrestrial echidnas (spiny anteaters) are the only living egg-laying mammals (monotremes). The fossil record has provided few clues as to their origins and the evolution of their ecological specializations; however, recent reassignment of the Early Cretaceous Teinolophos and Steropodon to the platypus lineage implies that platypuses and echidnas diverged >112.5 million years ago, reinforcing the notion of monotremes as living fossils. This placement is based primarily on characters related to a single feature, the enlarged mandibular canal, which supplies blood vessels and dense electrosensory receptors to the platypus bill. Our reevaluation of the morphological data instead groups platypus and echidnas to the exclusion of Teinolophos and Steropodon and suggests that an enlarged mandibular canal is ancestral for monotremes (partly reversed in echidnas, in association with general mandibular reduction). A multigene evaluation of the echidna-platypus divergence using both a relaxed molecular clock and direct fossil calibrations reveals a recent split of 19-48 million years ago. Platypus-like monotremes (Monotrematum) predate this divergence, indicating that echidnas had aquatically foraging ancestors that reinvaded terrestrial ecosystems. This ecological shift and the associated radiation of echidnas represent a recent expansion of niche space despite potential competition from marsupials. Monotremes might have survived the invasion of marsupials into Australasia by exploiting ecological niches in which marsupials are restricted by their reproductive mode. Morphology, ecology, and molecular biology together indicate that Teinolophos and Steropodon are basal monotremes rather than platypus relatives, and that living monotremes are a relatively recent radiation.