The Midas Cichlid complex has long been proposed to contain a multitude of species, although the results of several attempts to identify species and clarify taxonomic status have been disputed. Here we demonstrate results of studies in breeding habitat selection, feeding ecology, and microsatellite genetics of three newly described species in Lake Xiloá, Nicaragua, and conclude that these species are clearly distinct following the biological species concept. Furthermore, using microsatellite genetic data we demonstrate that these species are all distinct from forms of the Midas Cichlid species complex occurring in Lake Apoyo. The three described species from Lake Xiloá assortatively mated and differed in habitat preferences. This suggests that the processes of radiation of species in Lake Apoyo and Lake Xiloá are separate, and that similar morphologies between taxa of different lakes are due to convergent evolution. In addition, sympatric speciation may be occurring in each of Nicaragua’s crater lakes. The Great Lakes Basin of Nicaragua, therefore, provides a unique opportunity to study the process of evolution occurring in rapidly evolving species. We recomend urgently