Leucetta ‘chagosensis’ is a widespread calcareous sponge, occurring in shaded habitats of Indo-Pacific coral reefs. In this study we explore relationships among 19 ribosomal DNA sequence types (the ITS1-5.8S–ITS2 region plus flanking gene sequences) found among 54 individuals from 28 locations throughout the western Pacific, with focus on the Great Barrier Reef (GBR). Maximum parsimony analysis revealed phylogeographical structuring into four major clades (although not highly supported by bootstrap analysis) corresponding to the northern/central GBR with Guam and Taiwan, the southern GBR and subtropical regions south to Brisbane, Vanuatu and Indonesia. Subsequent nested clade analysis (NCA) confirmed this structure with a probability of > 95%. After NCA of geographical distances, a pattern of range expansion from the internal Indonesian clade was inferred at the total cladogram level, as the Indonesian clade was found to be the internal and therefore oldest clade. Two distinct clades were found on the GBR, which narrowly overlap geographically in a line approximately from the Whitsunday Islands to the northern Swain Reefs. At various clade levels, NCA inferred that the northern GBR clade was influenced by past fragmentation and contiguous range expansion events, presumably during/after sea level low stands in the Pleistocene, after which the northern GBR might have been recolonized from the Queensland Plateau in the Coral Sea. The southern GBR clade is most closely related to subtropical L. ‘chagosensis’, and we infer that the southern GBR probably was recolonized from there after sea level low stands, based on our NCA results and supported by oceanographic data. Our results have important implications for conservation and management of the GBR, as they highlight the importance of marginal transition zones in the generation and maintenance of species rich zones, such as the Great Barrier Reef World Heritage Area.