New Guineans represent one of the oldest locally continuous populations outside Africa, harboring among the greatest linguistic and genetic diversity on the planet. Archeological and genetic evidence suggest that their ancestors reached Sahul (present day New Guinea and Australia) by at least 55,000 years ago (kya). However, little is known about this early settlement phase or subsequent dispersal and population structuring over the subsequent period of time. Here we report 379 complete Papuan mitochondrial genomes from across Papua New Guinea, which allow us to reconstruct the phylogenetic and phylogeographic history of northern Sahul. Our results support the arrival of two groups of settlers in Sahul within the same broad time window (50–65 kya), each carrying a different set of maternal lineages and settling Northern and Southern Sahul separately. Strong geographic structure in northern Sahul remains visible today, indicating limited dispersal over time despite major climatic, cultural, and historical changes. However, following a period of isolation lasting nearly 20 ky after initial settlement, environmental changes postdating the Last Glacial Maximum stimulated diversification of mtDNA lineages and greater interactions within and beyond Northern Sahul, to Southern Sahul, Wallacea and beyond. Later, in the Holocene, populations from New Guinea, in contrast to those of Australia, participated in early interactions with incoming Asian populations from Island Southeast Asia and continuing into Oceania.