Trophic ecology is thought to exert a profound influence on biodiversity, but the specifics of the process are rarely examined at large spatial and evolutionary scales. We investigate how trophic position and diet breadth influence functional trait evolution in one of the most species-rich and complex vertebrate assemblages, coral reef fishes, within a large-scale phylogenetic framework. We show that, in contrast with established theory, functional traits evolve fastest in trophic specialists with narrow diet breadths at both very low and high trophic positions. Top trophic level specialists exhibit the most functional diversity, while omnivorous taxa with intermediate trophic positions and wide diet breadth have the least functional diversity. Our results reveal the importance of trophic position in shaping evolutionary dynamics while simultaneously highlighting the incredible trophic and functional diversity present in coral reef fish assemblages.