Interactions between species are important catalysts of the evolutionary processes that generate the remarkable diversity of life. Symbioses, conspicuous and inherently interesting forms of species interaction, are pervasive throughout the tree of life. However, nearly all studies of the impact of species interactions on diversification have concentrated on competition and predation leaving unclear the importance of symbiotic interaction. Here, I show that, as predicted by evolutionary theories of symbiosis and diversification, multiple origins of a key innovation, symbiosis between gall-inducing insects and fungi, catalysed both expansion in resource use (niche expansion) and diversification. Symbiotic lineages have undergone a more than sevenfold expansion in the range of host-plant taxa they use relative to lineages without such fungal symbionts, as defined by the genetic distance between host plants. Furthermore, symbiotic gall-inducing insects are more than 17 times as diverse as their non-symbiotic relatives. These results demonstrate that the evolution of symbiotic interaction leads to niche expansion, which in turn catalyses diversification.