Ecological interactions are ubiquitous on tropical coral reefs, where sessile organisms coexist in limited space. Within these high-diversity systems, reef-building scleractinian corals form an intricate interaction network. The role of biotic interactions among reef corals is well established on ecological timescales. However, its potential effect on macroevolutionary patterns remains unclear. By analysing the rich fossil record of Scleractinia, we show that reef coral biodiversity experienced marked evolutionary rate shifts in the last 3 million years, possibly driven by biotic interactions. Our models suggest that there was an overwhelming effect of staghorn corals (family Acroporidae) on the fossil diversity trajectories of other coral groups. Staghorn corals showed an unparalleled spike in diversification during the Pleistocene. But surprisingly, their expansion was linked with increases in both extinction and speciation rates in other coral families, driving a nine-fold increase in lineage turnover. These results reveal a double-edged effect of diversity dependency on reef evolution. Given their fast growth, staghorn corals may have increased extinction rates via competitive interactions, while promoting speciation through their role as ecosystem engineers. This suggests that recent widespread human-mediated reductions in staghorn coral cover, may be disrupting the key macroevolutionary processes that established modern coral reef ecosystems.