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 to 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 has, in this rare instance, evolved in trees, and whether this unique combination of traits could be exploited from an engineering perspective.