Identifying patterns of larval dispersal within marine metapopulations is vital for effective fisheries management, appropriate marine reserve design, and conservation efforts. We employed genetic markers (microsatellites) to determine dispersal patterns in bicolour damselfish (Pomacentridae: Stegastes partitus). Tissue samples of 751 fish were collected in 2004 and 2005 from 11 sites encompassing the Exuma Sound, Bahamas. Bayesian parentage analysis identified two parent–offspring pairs, which is remarkable given the large population sizes and 28 day pelagic larval duration of bicolour damselfish. The two parent–offspring pairs directly documented self-recruitment at the two northern-most sites, one of which is a long-established marine reserve. Principal coordinates analyses of pair-wise relatedness values further indicated that self-recruitment was common in all sampled populations. Nevertheless, measures of genetic differentiation (FST) and results from assignment methods suggested high levels of gene flow among populations. Comparisons of heterozygosity and relatedness among samples of adults and recruits indicated spatially and temporally independent sweepstakes events, whereby only a subset of adults successfully contribute to subsequent generations. These results indicate that self-recruitment and sweepstakes reproduction are the predominant, ecologically-relevant processes that shape patterns of larval dispersal in this system.