Mainland populations of Arctic reindeer and caribou Rangifer tarandus often undergo extensive movements, whereas populations on islands tend to be isolated and sedentary. To characterize the genetic consequences of this difference, levels of genetic diversity and subdivision of Svalbard reindeer (R. t. platyrhynchus) from two adjacent areas on Nordenskjiöldland, Spitsbergen were estimated using data from up to 14 microsatellites. The mean number of alleles per locus in Svalbard reindeer was 2.4 and mean expected heterozygosity per locus was 0.36. The latter value was significantly lower than in Canadian caribou and Norwegian reindeer but higher than in some other cervid species. Large samples of females (n = 743) and small samples of males (n = 38) from two sites ≈ 45 km apart showed genetic subdivision, which could be due to local population fluctuations or limited gene flow. To our knowledge, this is the first study to report significant differentiation at microsatellite loci in Rangifer at such short geographical distances. Neither population showed genetic evidence for recent population bottlenecks when loci unbiased with respect to heterozygosity were analysed. In contrast, false signals of a recent bottleneck were detected when loci upwardly biased with respect to heterozygosity were analysed. Thus, Svalbard reindeer appeared to conform to the paradigm of island populations made genetically depauperate by genetic drift.