We isolated over 650 yeasts over a three year period from the gut of a variety of beetles and characterized them on the basis of LSU rDNA sequences and morphological and metabolic traits. Of these, at least 200 were undescribed taxa, a number equivalent to almost 30% of all currently recognized yeast species. A Bayesian analysis of species discovery rates predicts further sampling of previously sampled habitats could easily produce another 100 species. The sampled habitat is, thereby, estimated to contain well over half as many more species as are currently known worldwide. The beetle gut yeasts occur in 45 independent lineages scattered across the yeast phylogenetic tree, often in clusters. The distribution suggests that the some of the yeasts diversified by a process of horizontal transmission in the habitats and subsequent specialization in association with insect hosts. Evidence of specialization comes from consistent associations over time and broad geographical ranges of certain yeast and beetle species. The discovery of high yeast diversity in a previously unexplored habitat is a first step toward investigating the basis of the interactions and their impact in relation to ecology and evolution.