The importance of species recognition to taxonomic diversity among Lake Malawi cichlids has been frequently discussed. Hybridization - the apparent breakdown of species recognition - has been observed sporadically among cichlids and has been viewed as both a constructive and a destructive force with respect to species diversity. Here we provide genetic evidence of a natural hybrid cichlid population with a unique colour phenotype and elevated levels of genetic variation. We discuss the potential evolutionary consequences of interspecific hybridization in Lake Malawi cichlids and propose that the role of hybridization in generating both genetic variability and species diversity of Lake Malawi cichlids warrants further consideration.