Phylogenetic analyses of DNA-sequence data have revealed that the southern hemisphere species of Veronica are derived from within the northern hemisphere Veronica clade. Previous analyses focussed on the species in New Zealand and included at maximum 7 of 23 species of section Labiatoides from Australia. In the present study, we used nuclear ribosomal-ITS and plastid ndhF–rpl32-spacer sequence data of all species currently recognised in Australia to analyse phylogenetic patterns. Most importantly, herbaceous species from coastal calcareous sands or limestone habitats do not form a clade with those from shady, moist forest habitats, as formerly believed, but seem to be independently derived from woody species. Incongruence between results from nuclear- and plastid-DNA markers suggest hybridisation to be an important factor in the evolution of the group. Our sample of V. parnkalliana included alleles similar to V. decorosa and V. novae-hollandiae at both loci, which suggests a hybrid origin.