We investigated the distributions of genetic and phenotypic variation for two Yellowstone National Park populations of the heterocyst-forming cyanobacterium Mastigocladus (Fischerella) laminosus that exhibit dramatic phenotypic differences as a result of environmental differences in nitrogen availability. One population develops heterocysts and fixes nitrogen in situ in response to a deficiency of combined nitrogen in its environment, whereas the other population does neither due to the availability of a preferred nitrogen source. Slowly evolving molecular markers, including the 16S rRNA gene and the downstream internal transcribed spacer, are identical among all laboratory isolates from both populations but belie considerable genetic and phenotypic diversity. The total nucleotide diversity at six nitrogen metabolism loci was roughly three times greater than that observed for the human global population. The two populations are genetically differentiated, although variation in performance on different nitrogen sources among genotypes could not be explained by local adaptation to available nitrogen in the respective environments. Population genetic models suggest that local adaptation is mutation limited but also that the populations are expected to continue to diverge due to low migratory gene flow.