A fundamental question in evolutionary ecology and conservation biology is: why do some areas contain greater species diversity than others? Island biogeographic theory has identified the roles of immigration and extinction in relation to area size and proximity to source areas, and the role of speciation is also recognized as an important factor. However, one as yet unexplored possibility is that species diversity itself might help to promote speciation, and indeed the central tenets of island biogeographic theory support such a prediction. Here we use data for plants and arthropods of the volcanic archipelagos of the Canary and Hawaiian Islands to address whether there is a positive relationship between species diversity and rate of diversification. Our index of diversification for each island is the proportion of species that are endemic, and we test our prediction that this increases with increasing species number. We show that even after controlling for several important physical features of islands, diversification is strongly related to species number.