The unprecedented diversifications in the fossil record of the early Palaeozoic (541–419 million years ago) increased both within-sample (α) and global (γ) diversity, generating considerable ecological complexity. Faunal difference (β diversity), including spatial heterogeneity, is thought to have played a major role in early Palaeozoic marine diversification, although α diversity is the major determinant of γ diversity through the Phanerozoic. Drivers for this Phanerozoic shift from β to α diversity are not yet resolved. Here, we evaluate the impacts of environmental and faunal heterogeneity on diversity patterns using a global spatial grid. We present early Palaeozoic genus-level α, β and γ diversity curves for molluscs, brachiopods, trilobites and echinoderms and compare them with measures of spatial lithological heterogeneity, which is our proxy for environmental heterogeneity. We find that α and β diversity are associated with increased lithological heterogeneity, and that β diversity declines over time while α increases. We suggest that the enhanced dispersal of marine taxa from the Middle Ordovician onwards facilitated increases in α diversity by encouraging the occupation of narrow niches and increasing the prevalence of transient species, simultaneously reducing spatial β diversity. This may have contributed to a shift from β to α diversity as the major determinant of γ diversity increase over this critical evolutionary interval.