Sympatric speciation has been contentious since its inception, yet is increasingly recognized as important based on accumulating theoretical and empirical support. Here, we present a compelling case of sympatric speciation in a taxon of marine reef fishes using a comparative and mechanistic approach. Hexagrammos otakii and H. agrammus occur in sympatry throughout their ranges. Molecular sequence data from six loci, with complete sampling of the genus, support monophyly of these sister species. Although hybridization occurrs frequently with an allopatric congener in an area of slight distributional overlap, we found no F1 hybrids between the focal sympatric taxa throughout their coextensive ranges. We present genetic evidence for complete reproductive isolation based on SNP analysis of 382 individuals indicating fixed polymorphisms, with no shared haplotypes or genotypes, between sympatric species. To address questions of speciation, we take a mechanistic approach and directly compare aspects of reproductive isolation between allopatric and sympatric taxa both in nature and in the laboratory. We conclude that the buildup of reproductive isolation is strikingly different in sympatric vs. allopatric taxa, consistent with theoretical predictions. Lab reared hybrids from allopatric species crosses exhibit severe fitness effects in the F1 or backcross generation. No intrinsic fitness effects are observed in F1 hybrids from sympatric species pairs, however these treatments exhibited reduced fertilization success and complete pre-mating isolation is implied in nature because F1 hybrid adults do not occur. Our study addresses limitations of previous studies and supports new criteria for inferring sympatric speciation.