We present a study of the genetic diversity and structure of a tropical tree in an insular system. Santalum austrocaledonicum is endemic to the archipelago of New Caledonia and is exploited for oil extraction from heartwood. A total of 431 individuals over 17 populations were analysed for eight polymorphic microsatellite loci. The number of alleles per locus ranged from 3 to 33 and the observed heterozygosity per population ranged from 0.01 in Maré to 0.74 in Ile des Pins. The genetic diversity was lowest in the most recent islands, the Loyautés, and highest in the oldest island, Grande Terre, as well as the nearby small Ile des Pins. Significant departures from panmixia were observed for some loci–population combinations (per population FIS = 0–0.03 on Grande-Terre and Ile des Pins, and 0–0.67 on Loyautés). A strong genetic differentiation among all islands was observed (FST = 0.22), and the amount of differentiation increased with geographic distance in Iles Loyauté and in Grande Terre. At both population and island levels, island age and isolation seem to be the main factors influencing the amount of genetic diversity. In particular, populations from recent islands had large average FIS that could not be entirely explained by null alleles or a Wahlund effect. This result suggests that, at least in some populations, selfing occurred extensively. Conclusively, our results indicate a strong influence of insularity on the genetic diversity and structure of Santalum austrocaledonicum.