To examine the effects of recent habitat fragmentation, we assayed genetic diversity in a rain forest endemic lizard, the prickly forest skink (Gnypetoscincus queenslandiae), from seven forest fragments and five sites in continuous forest on the Atherton tableland of northeastern Queensland, Australia. The rain forest in this region was fragmented by logging and clearing for dairy farms in the early 1900s and most forest fragments studied have been isolated for 50–80 years or nine to 12 skink generations. We genotyped 411 individuals at nine microsatellite DNA loci and found fewer alleles per locus in prickly forest skinks from small rain forest fragments and a lower ratio of allele number to allele size range in forest fragments than in continuous forest, indicative of a decrease in effective population size. In contrast, and as expected for populations with small neighbourhood sizes, neither heterozygosity nor variance in allele size differed between fragments and sites in continuous forests. Considering measures of among population differentiation, there was no increase in FST among fragments and a significant isolation by distance pattern was identified across all 12 sites. However, the relationship between genetic (FST) and geographical distance was significantly stronger for continuous forest sites than for fragments, consistent with disruption of gene flow among the latter. The observed changes in genetic diversity within and among populations are small, but in the direction predicted by the theory of genetic erosion in recently fragmented populations. The results also illustrate the inherent difficulty in detecting genetic consequences of recent habitat fragmentation, even in genetically variable species, and especially when effective population size and dispersal rates are low.