Loss of genetic variation in small, isolated populations is commonly observed at neutral or nearly neutral loci. In this study, the loss of genetic variation was assessed in island populations for a locus of major histocompatibility complex (Mhc), a locus shown to be under the influence of balancing selection. A total of 36 alleles was found at the second exon of RT1.Ba in 14 island and two mainland populations of Rattus fuscipes greyii. Despite this high overall diversity, a substantial lack of variation was observed in the small island populations, with 13 islands supporting only one to two alleles. Two populations, Waldegrave and Williams Islands, showed moderately high levels of heterozygosity (52–56%) which were greater than expected under neutrality, suggesting the action of balancing selection. However, congruence between the level of variation at this Mhc locus and in previous allozyme electrophoresis and mitochondrial DNA studies highlights the dominant influence of genetic drift and population factors, such as bottlenecks and structuring in the founding population, in the loss of genetic variation in these small, isolated populations.