In cryptic amphibian complexes, there is a growing trend to equate high levels of genetic structure with hidden cryptic species diversity. Typically, phylogenetic structure and distance-based approaches are used to demonstrate the distinctness of clades and justify the recognition of new cryptic species. However, this approach does not account for gene flow, spatial, and environmental processes that can obfuscate phylogenetic inference and bias species delimitation. As a case study, we sequenced genome-wide exons and introns to evince the processes that underlie the diversification of Philippine Puddle Frogs—a group that is widespread, phenotypically conserved, and exhibits high levels of geographically-based genetic structure. We showed that widely adopted tree- and distance-based approaches inferred up to 20 species, compared to genomic analyses that inferred an optimal number of five distinct genetic groups. Using a suite of clustering, admixture, and phylogenetic network analyses, we demonstrate extensive admixture among the five groups and elucidate two specific ways in which gene flow can cause overestimations of species diversity: (1) admixed populations can be inferred as distinct lineages characterized by long branches in phylograms; and (2) admixed lineages can appear to be genetically divergent, even from their parental populations when simple measures of genetic distance are used. We demonstrate that the relationship between mitochondrial and genome-wide nuclear p-distances is decoupled in admixed clades, leading to erroneous estimates of genetic distances and, consequently, species diversity. Additionally, genetic distance was also biased by spatial and environmental processes. Overall, we showed that high levels of genetic diversity in Philippine Puddle Frogs predominantly comprise metapopulation lineages that arose through complex patterns of admixture, isolation-by-distance, and isolation-by-environment as opposed to species divergence. Our findings suggest that speciation may not be the major process underlying the high levels of hidden diversity observed in many taxonomic groups and that widely-adopted tree- and distance-based methods overestimate species diversity in the presence of gene flow.