Evolutionary biologists have endeavoured to explain the extraordinary diversity of sperm morphology across animals. One hypothesis to explain sperm diversity is that sperm length is shaped by the environment where fertilization takes place. Evolutionary transitions in fertilization modes may transform how selection on sperm length is exerted, likely by affecting postcopulatory mechanisms of sperm competition and the scope for cryptic female choice. Here, we address this hypothesis by generating a macroevolutionary view of how fertilization mode (including external fertilizers, internal fertilizers and spermcasters) influences sperm length diversification among 3,233 species from 21 animal phyla. We show that sperm is shorter in species whose sperm are diluted in aquatic environments (i.e. external fertilizers and spermcasters), while sperm are longer in species where sperm are directly transferred to females (i.e. internal fertilizers). This result is found across all animals, or at the level of phyla or class. We also show that sperm length evolves faster and with a greater number of major adaptive shifts in species where sperm operate within females (e.g. spermcasters and internal fertilizers). Our results demonstrate that fertilization mode is a key driver in the evolution of sperm length across animals and support a complex combination of postcopulatory forces influencing sperm length diversification.