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Aim: Understanding how natural populations respond to climatic shifts is a fundamental goal of biological research in a fast‐changing world. The Southern Ocean represents a fascinating system for assessing large‐scale climate‐driven biological change, as it contains extremely isolated island groups within a predominantly westerly, circumpolar wind and current system. Blue‐eyed shags represent a paradoxical seabird radiation—a circumpolar distribution implies strong dispersal capacity yet their species‐rich nature suggests local adaptation and isolation. Here we attempt to resolve this paradox in light of the history of repeated cycles of climate change in the Southern Ocean. Location: Southern Ocean. Taxa: 16 species and subspecies of blue‐eyed shags (Phalacrocoracidae; Leucocarbo spp.). Methods: We use mitochondrial and nuclear sequence data from individuals across the geographical range of the genus to conduct the first comprehensive, time‐calibrated phylogenetic analyses and ancestral‐range biogeographical reconstructions of the blue‐eyed shags. Results: The origins of many island‐endemic lineages are remarkably recent, consistent with a recent high‐latitude circumpolar radiation in the Pliocene or Early Pleistocene. This recent sub‐Antarctic expansion contrasts with significantly deeper lineages detected in South America and, to a lesser extent, New Zealand. These regions, particularly South America, acted as glacial refugia and sources for multiple waves of post‐glacial dispersal. Main conclusions: The blue‐eyed shag paradox is resolved, with at least two waves of dispersal, linked to interglacial cycles, explaining the current distribution and diversity. Descendants of a Pliocene or Early Pleistocene wave of dispersal out of South America survive in the New Zealand region. In contrast, taxa distributed on sub‐Antarctic islands originated much later, possibly since the Last Glacial Maximum. Blue‐eyed shags therefore represent a powerful model system—comprising several natural replicates—for studying the early stages of founder‐event speciation and adaptation in a Southern‐Ocean bird group. [ABSTRACT FROM AUTHOR]