Previous studies have demonstrated the ecological sorting of herbaceous C3 and C4 species along gradients of precipitation and temperature: C4 herbaceous species typically occupy drier and warmer environments than their C3 relatives. However, it is unclear if this pattern holds true for C4 tree species, which are unique to Euphorbiaceae and found only on the Hawaiian Islands. Here, we combine occurrence data with local environmental and soil datasets to, for the first time, distinguish the ecological factors associated with photosynthetic diversification in the tree life form. These data are presented within a phylogenetic framework. We show that C3 and C4 trees inhabit similar environments, but that C4 photosynthesis expands the ecological niche in trees relative to that of C3 tree species. In particular, when compared with C3 trees, C4 trees moved into higher elevation habitats with characteristically sparse vegetation (and thus greater sunlight) and cooler temperatures, a pattern which contrasts with that of herbaceous species. Understanding the relationship between C4 photosynthesis and ecological niche in tree species has implications for establishing how C4 photosynthesis has, in this rare instance, evolved in trees, and whether this unique combination of traits could be exploited from an engineering perspective.