It has often been suggested that the productivity of an ecosystem affects the number of species that it can support. Despite decades of study, the nature, extent, and underlying mechanisms of this relationship are unclear. One suggested mechanism is the “more individuals” hypothesis (MIH). This proposes that productivity controls the number of individuals in the ecosystem, and that more individuals can be divided into a greater number of species before their population size is sufficiently small for each to be at substantial risk of extinction. Here, we test this hypothesis using REvoSim: an individual-based eco-evolutionary system that simulates the evolution and speciation of populations over geological time, allowing phenomena occurring over timescales that cannot be easily observed in the real world to be evaluated. The individual-based nature of this system allows us to remove assumptions about the nature of speciation and extinction that previous models have had to make. Many of the predictions of the MIH are supported in our simulations: Rare species are more likely to undergo extinction than common species, and species richness scales with productivity. However, we also find support for relationships that contradict the predictions of the strict MIH: species population size scales with productivity, and species extinction risk is better predicted by relative than absolute species population size, apparently due to increased competition when total community abundance is higher. Furthermore, we show that the scaling of species richness with productivity depends upon the ability of species to partition niche space. Consequently, we suggest that the MIH is applicable only to ecosystems in which niche partitioning has not been halted by species saturation. Some hypotheses regarding patterns of biodiversity implicitly or explicitly overlook niche theory in favor of neutral explanations, as has historically been the case with the MIH. Our simulations demonstrate that niche theory exerts a control on the applicability of the MIH and thus needs to be accounted for in macroecology.