Global biodiversity currently peaks at the equator and decreases toward the poles. Growing fossil evidence suggest this hump‐shaped latitudinal diversity gradient (LDG) has not been persistent through time, with similar diversity across latitudes flattening out the LDG during past greenhouse periods. However, when and how diversity declined at high latitudes to generate the modern LDG remains an open question. Although diversity‐loss scenarios have been proposed, they remain mostly undemonstrated. We outline the “asymmetric gradient of extinction and dispersal” framework that contextualizes previous ideas behind the LDG under a time‐variable scenario. Using phylogenies and fossils of Testudines, Crocodilia, and Lepidosauria, we find that the hump‐shaped LDG could be explained by (1) disproportionate extinctions of high‐latitude tropical‐adapted clades when climate transitioned from greenhouse to icehouse, and (2) equator‐ward biotic dispersals tracking their climatic preferences when tropical biomes became restricted to the equator. Conversely, equivalent diversification rates across latitudes can account for the formation of an ancient flat LDG. The inclusion of fossils in macroevolutionary studies allows revealing time‐dependent extinction rates hardly detectable from phylogenies only. This study underscores that the prevailing evolutionary processes generating the LDG during greenhouses differed from those operating during icehouses.