Island populations are an interesting dichotomy in conservation biology. On the one hand, they can be a refuge for species where mainland populations have been decimated by loss of habitat and predation by exotic predators. On the other hand, island populations usually have reduced genetic diversity and are more susceptible to extinction through genetic and demographic processes. Genetic variation and morphological characters were measured for island and mainland populations of Parantechinus apicalis, small dasyurid marsupials, restricted to southwest Australia. Genetic variation at seven microsatellite loci revealed low levels of heterozygosity (He = 0.20−0.44) and high levels of inbreeding (Fe = 0.40−0.72) in island populations compared with the mainland population (He = 0.73). A nested clade analysis revealed that allopatric fragmentation was probably responsible for the association between geographical location and control region haplotypes, which is consistent with the isolation of populations on islands and indicative of two main populations of P. apicalis representing separate conservation units for management. While these results are typical of many island populations, they have important implications in terms of the conservation of threatened species in Australia and around the world, where island populations are a common source of founders for captive breeding and translocation to mainland sites.