Populations of obligately estuarine taxa are potentially small and isolated and may lack genetic variation and display regional differentiation as a result of drift and inbreeding. Hybridization with a wide-ranging marine congener should introduce genetic variation and reduce the effects of inbreeding depression and genetic drift. However, high levels of hybridization can cause demographic and genetic swamping. In southeastern Australia hybridization occurs between obligately estuarine Black bream (Acanthopagrus butcheri) and migratory marine Yellowfin bream (Acanthopagrus australis). Here, we surveyed genetic variation at eight microsatellite loci and the mitochondrial control region of juvenile fish from five coastal lagoons (including temporal replication in two lagoons) (total n = 970) to determine the frequency and persistence of hybridization, and its likely consequence for the estuarine restricted A. butcheri. Of 688 juvenile fish genotyped 95% were either A. australis (347) or hybrids (309); only 5% (32) were A. butcheri. Most hybrids were later generation hybrids or A. butcheri backcrosses, which are likely multi-generational residents within lagoons. Far greater proportions of hybrid juveniles were found within two lagoons that are generally closed to the ocean (>90% hybrid fish within generally closed lagoons vs. 12–27% in permanently or intermittently open lagoons). In both lagoons, this was consistent across multiple cohorts of fish [79–97% hybrid fish (n = 282)]. Hybridization and introgression represent a major threat to the persistence of A. butcheri and have yet to be investigated for large numbers of estuarine taxa.