The microcrustacean Daphnia is arguably one of the most studied zooplankton species, having a well understood ecology, life history, and a relatively well studied evolutionary history. Despite this wealth of knowledge, species boundaries within this genus often remain elusive and the major evolutionary forces driving the diversity of daphniids remain controversial. This genus contains more than 300 species with multiple cryptic species complexes, with many closely related species able to hybridize. Here we review speciation research in Daphnia within the framework of current speciation theory. We evaluate the role of geography, ecology, and biology in restricting gene flow and promoting diversification. Of the 253 speciation studies on Daphnia, the majority of studies examine geographic barriers (55%). While evidence shows that geographic barriers play a role in species divergence, ecological barriers are also likely prominent in Daphnia speciation. We assess the contribution of ecological and non-ecological reproductive isolating barriers between closely related species of Daphnia and found that none of the reproductive isolating barriers are capable of restricting gene flow completely. Research on reproductive isolating barriers has been disproportionally focused on two species complexes, Daphnia pulex and Daphnia longispina. Lastly, we identify areas of research that remain relatively unexplored and discuss future research directions that build our understanding of speciation in daphniids.