Founder analysis is a method for analysis of nonrecombining DNA sequence data, with the aim of identification and dating of migrations into new territory. The method picks out founder sequence types in potential source populations and dates lineage clusters deriving from them in the settlement zone of interest. Here, using mtDNA, we apply the approach to the colonization of Europe, to estimate the proportion of modern lineages whose ancestors arrived during each major phase of settlement. To estimate the Palaeolithic and Neolithic contributions to European mtDNA diversity more accurately than was previously achievable, we have now extended the Near Eastern, European, and northern-Caucasus databases to 1,234, 2, 804, and 208 samples, respectively. Both back-migration into the source population and recurrent mutation in the source and derived populations represent major obstacles to this approach. We have developed phylogenetic criteria to take account of both these factors, and we suggest a way to account for multiple dispersals of common sequence types. We conclude that (i) there has been substantial back-migration into the Near East, (ii) the majority of extant mtDNA lineages entered Europe in several waves during the Upper Palaeolithic, (iii) there was a founder effect or bottleneck associated with the Last Glacial Maximum, 20,000 years ago, from which derives the largest fraction of surviving lineages, and (iv) the immigrant Neolithic component is likely to comprise less than one-quarter of the mtDNA pool of modern Europeans.