The living coelacanth Latimeria (Sarcopterygii: Actinistia) is an iconic, so-called 'living fossil' within one of the most apparently morphologically conservative vertebrate groups. We describe a new, 3-D preserved coelacanth from the Late Devonian Gogo Formation in Western Australia. We assemble a comprehensive analysis of the group to assess the phylogeny, evolutionary rates, and morphological disparity of all coelacanths. We reveal a major shift in morphological disparity between Devonian and post-Devonian coelacanths. The newly described fossil fish fills a critical transitional stage in coelacanth disparity and evolution. Since the mid-Cretaceous, discrete character changes (representing major morphological innovations) have essentially ceased, while meristic and continuous characters have continued to evolve within coelacanths. Considering a range of putative environmental drivers, tectonic activity best explains variation in the rates of coelacanth evolution.