The formation of islands following a rise in sea level at the end of Pleistocene is expected to disrupt the equilibrium between genetic drift and gene flow in species with limited ability to disperse. Here, we test the hypothesis that genetic drift in isolation has caused the differentiation of Galápagos lava lizards (Microlophus albemarlensis complex) found on 12 islets that are likely to have been connected to a larger island, Isla Santa Cruz, during the late Pleistocene. Using 11 microsatellite loci, screened on 524 individuals from 17 localities distributed among and within 15 islands, we found marked differences in allelic richness and heterozygosity. Genetic differentiation was strong (global F(ST) = 0.44), with pairwise differences found among populations on islets being larger than differences among three localities sampled within Isla Santa Cruz. As expected under a scenario of drift in isolation, there was a positive correlation of genetic diversity with island size, no relationship between genetic and geographical distance and a strong negative correlation between heterozygosity and measures of genetic differentiation. We conclude that seawater is a significant barrier to gene flow in lava lizards on this timescale. Our results suggest that the shallow diversification of the M. albemarlensis complex is not due to recent gene flow and that genetic drift may have played a substantial role in observed patterns of phenotypic variation among islands.