Most of our understanding of island diversity comes from the study of aboveground systems, while the patterns and processes of diversification and community assembly for belowground biotas remain poorly understood. Here, we take advantage of a relatively young and dynamic oceanic island to advance our understanding of ecoevolutionary processes driving community assembly within soil mesofauna. Using whole organism community DNA (wocDNA) metabarcoding and the recently developed metaMATE pipeline, we have generated spatially explicit and reliable haplotype-level DNA sequence data for soil mesofaunal assemblages sampled across the four main habitats within the island of Tenerife. Community ecological and metaphylogeographic analyses have been performed at multiple levels of genetic similarity, from haplotypes to species and supraspecific groupings. Broadly consistent patterns of local-scale species richness across different insular habitats have been found, whereas local insular richness is lower than in continental settings. Our results reveal an important role for niche conservatism as a driver of insular community assembly of soil mesofauna, with only limited evidence for habitat shifts promoting diversification. Furthermore, support is found for a fundamental role of habitat in the assembly of soil mesofauna, where habitat specialism is mainly due to colonization and the establishment of preadapted species. Hierarchical patterns of distance decay at the community level and metaphylogeographical analyses support a pattern of geographic structuring over limited spatial scales, from the level of haplotypes through to species and lineages, as expected for taxa with strong dispersal limitations. Our results demonstrate the potential for wocDNA metabarcoding to advance our understanding of biodiversity.