Both functional adaptation and phylogeny shape the morphology of taxa within clades. Herein we explore these two factors in an integrated way by analyzing shape and size variation in the mandible of extant squirrels using landmark-based geometric morphometrics in combination with a comparative phylogenetic analysis. Dietary specialization and locomotion were found to be reliable predictors of mandible shape, with the prediction by locomotion probably reflecting the underlying diet. In addition a weak but significant allometric effect could be demonstrated. Our results found a strong phylogenetic signal in the family as a whole as well as in the main clades, which is in agreement with the general notion of squirrels being a conservative group. This fact does not preclude functional explanations for mandible shape, but rather indicates that ancient adaptations kept a prominent role, with most genera having diverged little from their ancestral clade morphologies. Nevertheless, certain groups have evolved conspicuous adaptations that allow them to specialize on unique dietary resources. Such adaptations mostly occurred in the Callosciurinae and probably reflect their radiation into the numerous ecological niches of the tropical and subtropical forests of Southeastern Asia. Our dietary reconstruction for the oldest known fossil squirrels (Eocene, 36 million years ago) show a specialization on nuts and seeds, implying that the development from protrogomorphous to sciuromorphous skulls was not necessarily related to a change in diet.