Abstract Paeonia decomposita , Paeonia rotundiloba , and Paeonia rockii are three closely related species of Sect. Moutan is distributed in the montane area of the Eastern Hengduan Mountain region. Understanding the population history of these three tree peony species could contribute to unraveling the evolutionary patterns of undergrowth species in this hotspot area. We used one nuclear DNA marker (internal transcribed spacer region, ITS) and two chloroplast DNA markers ( matK , ycf1 ) to reconstruct the phylogeographic pattern of the populations. In total, 228 individuals from 17 populations of the three species were analyzed in this study. Three nuclear clades (Clade I – Clade III) and four maternal clades (Clade A – Clade D) were reconstructed. Molecular dating suggested that young lineages diverged during the late Pliocene and early Pleistocene, younger than the uplift of the Hengduan Mountains but older than the last glacial maximum (LGM). Significant population and phylogeographic structures were detected at both markers. Furthermore, the populations of these tree peonies were overall at equilibrium during the climatic oscillations of the Pleistocene. The simulated palaeoranges of the three species during the LGM period mostly overlapped, which could have led to cross‐breeding events. We propose an evolutionary scenario in which mountain orogenesis around the Hengduan Mountain area triggered parapatric isolation between maternal lineages of tree peonies. Subsequent climatic fluctuations drove migration and range recontact of these populations along the valleys. This detailed evolutionary history provides new insights into the phylogeographic pattern of species from mountain‐valley systems.