Determining the extent of dispersal in exploited marine fishes is essential for understanding their population dynamics and optimising management. The West Australian dhufish, Glaucosoma hebraicum, is a highly sought-after, large and long-lived reef-dwelling species, endemic to south-western Australia. Stock assessments indicate that this indicator species is overexploited. The fishery is managed using a zone-based system, which implicitly assumes a high degree of demographic independence among zones. While tagging studies indicate limited movement of adult G. hebraicum, there is no understanding of the spatial scale of dispersal of its larvae and thus the true extent of interdependence of management zones. We analysed 13 microsatellite DNA loci to characterise the extent of gene flow, and conducted particle tracking simulations to model larval transport in this species. Genetic data demonstrated that some local recruitment was likely, but that on a broad scale gene flow between the management zones was extensive, and the entire fishery represents a single genetic stock. Hydrodynamic modelling predicted that the majority of dhufish larvae recruit from within the management zone where they are spawned, and that inter-annual variation in current velocities has limited effect on the extent of larval transport. Because management zones are likely to be largely independent in terms of both larval and adult recruitment, heavy localised fishing pressure has the potential to reduce the abundance and reproductive capacity of this species in highly fished areas, but it should have limited impact on neutral genetic diversity.