The Finnish wolf population (Canis lupus) was sampled during three different periods (1996–1998, 1999–2001 and 2002–2004), and 118 individuals were genotyped with 10 microsatellite markers. Large genetic variation was found in the population despite a recent demographic bottleneck. No spatial population subdivision was found even though a significant negative relationship between genetic relatedness and geographic distance suggested isolation by distance. Very few individuals did not belong to the local wolf population as determined by assignment analyses, suggesting a low level of immigration in the population. We used the temporal approach and several statistical methods to estimate the variance effective size of the population. All methods gave similar estimates of effective population size, approximately 40 wolves. These estimates were slightly larger than the estimated census size of breeding individuals. A Bayesian model based on Markov chain Monte Carlo simulations indicated strong evidence for a long-term population decline. These results suggest that the contemporary wolf population size is roughly 8% of its historical size, and that the population decline dates back to late 19th century or early 20th century. Despite an increase of over 50% in the census size of the population during the whole study period, there was only weak evidence that the effective population size during the last period was higher than during the first. This may be caused by increased inbreeding, diminished dispersal within the population, and decreased immigration to the population during the last study period.