Aim To evaluate the state of knowledge about the biogeography of Brazilian reef fishes and propose processes that lead to the observed distribution patterns. Location The tropical western Atlantic. Methods The geological history of the Amazon barrier was obtained from the literature, and its potential influence on speciation of reef fishes was analysed. Species distributions were analysed based on literature records and material deposited at Brazilian and American collections. Results Recent estimates indicate that about 12% of the Brazilian reef fish species are endemic, and most ichthyologists agree that this endemism is generated by the barrier formed by the freshwater and sediment discharge of large rivers in north‐eastern South America, mainly the Amazon, Orinoco and their tributaries. However, little is known about the dynamics of this barrier, and recent studies have demonstrated that it can be crossed through deep sponge bottoms on the outer continental shelf off north‐eastern South America. Moreover, the recent discovery of species regarded as Brazilian endemics in the extreme southern Caribbean is showing that the Amazon barrier is weaker than previously thought. Main conclusions The Amazon freshwater and sediment outflow is a strong barrier to shallow water reef fish and other organisms, and it is probably responsible for most of the endemism found in Brazilian coastal habitats. However, sea‐level fluctuations influence the effectiveness of such barrier and may play a large role in the generation of diversity in the western tropical Atlantic. Alternatively, larval exchange between Brazil and the Caribbean is small but constant, and contrasting selection pressures in divergent environments (continental Brazil vs. insular Caribbean) may be the central force driving speciation.