The archaeological record indicates that guanacos inhabited the Patagonia of Chile and Argentina about 13,600 years ago, but were unable to migrate further south owing to the presence of glacial and water barriers that covered much of southern South America including the island of Tierra del Fuego. As environmental and ecological conditions improved, guanacos, along with other large mammals including horses, colonized the area. As a result of continued world-wide glacial melting, ocean levels rose and Tierra del Fuego became isolated from the mainland approximately 8000 years ago. Although island populations generally exhibit lower levels of genetic variation than their counterpart mainland populations, it is difficult to predict how much less variation island populations will exhibit. An analysis of mitochondrial cytochrome b and ATPase-8 sequences and 15 nuclear microsatellite loci revealed that both populations retained appreciable genetic diversity. The island population, however, exhibited much less variation than the mainland population. Measures of genetic variation revealed modest, but significant genetic differentiation, consistent with separation of the two populations approximately 8000 years ago. The assessment of levels of genetic diversity and population differentiation among populations of the wild South American camelids is becoming increasingly important as interest mounts in their utilization as a renewable resource.