Abstract Aim The Southwest USA is characterized by fragmented habitat for a range of species in a manner analogous to island systems. This can restrict gene flow among populations and may promote genetic differentiation and the evolution of endemic populations or species among the forested terrestrial islands. The region has experienced cycles of cooling and warming throughout the Pleistocene and the current isolation among populations may date back only c. 11,000 years. Thus, some studies have found genetic structure that predates the current distribution of organisms. The effect of habitat fragmentation on genetic structure was tested using DNA sequences in a highly specialized herbivorous insect, grape phylloxera, Daktulosphaira vitifoliae, that exhibits poor dispersal capacity and natal-host associated mating that would seem to predispose it to genetic differentiation. Location Southwestern USA. Methods Phylogenetic trees and statistical parsimony networks were estimated from 458 bp of the mitochondrial cytochrome oxidase I gene sampled from 12 populations in Arizona and New Mexico. Results There was no evidence that populations were differentiated at the level of canyon or mountain range but significant structure was found at the larger level of geographic region. The pattern was confounded by the polyphyly of Southwest (SW) grape phylloxera relative to eastern populations and the coexistence of two highly divergent lineages within populations. Main conclusions An early split of grape phylloxera into the SW has resulted in some differentiation between populations in the Transition and Sonoran + Chihuahuan geographic regions. It is hypothesized that this differentiation has been overlaid by a more recent introduction of haplotypes from midwestern USA populations that occur primarily in the Transition region. The importance of sampling broadly is stressed.