Peninsular India is an important region for mammalian diversification and harbors major biogeographic barriers. However, little is known about the role of this region in the diversification of bats though it harbors high chiropteran diversity. In this study, we used phenotypic, acoustic and genetic markers to assess the diversification of Rhinolophus lepidus bats in South Asia. We first investigated if peninsular India is associated with speciation of R. lepidus. Further, we tested if the Palghat Gap acts as a biogeographic barrier to gene flow in this species. Our results revealed cryptic genetic diversity in peninsular India suggesting that this region holds at least one endemic species level lineage of the R. lepidus species complex. Analyses of populations of R. lepidus across the Palghat Gap in the Western Ghats revealed clinal variation in phenotype, with bats south of this barrier being bigger and emitting echolocation calls of higher frequency. We also observed that populations on either side of the Palghat Gap have remained genetically isolated since the mid-Holocene.