Trypanosoma cruzi, the causative agent of Chagas disease, has at least two principal intraspecific subdivisions, T. cruzi I (TCI) and T. cruzi II (TCII), the latter containing up to five subgroups (a-e). Whilst it is known that TCI predominates from the Amazon basin northwards and TCII to the South, where the disease is considered to be clinically more severe, the precise clinical and evolutionary significance of these divisions remains enigmatic. Here, we present compelling evidence of an association between TCI and opossums (Didelphis), and TCII and armadillos, on the basis of key new findings from the Paraguayan Chaco region, together with a comprehensive analysis of historical data. We suggest that the distinct arboreal and terrestrial ecologies, respectively, of these mammal hosts provide a persuasive explanation for the extant T. cruzi intraspecific diversity in South America, and for separate origins of Chagas disease in northern South America and in the southern cone countries.