Habitat fragmentation and its genetic consequences are a critically important issue in evaluating the evolutionary penalties of human habitat modification. Here, we examine the genetic structure and diversity in naturally subdivided and artificially fragmented populations of the endangered tidewater goby (Eucyclogobius newberryi), a small fish restricted to discrete coastal lagoons and estuaries in California, USA. We use five naturally fragmented coastal populations from a 300- km spatial scale as a standard to assess migration and drift relative to eight artificially fragmented bay populations from a 30- km spatial scale. Using nine microsatellite loci in 621 individuals, and a 522-base fragment of mitochondrial DNA control region from 103 individuals, we found striking differences in the relative influences of migration and drift on genetic variation at these two scales. Overall, the artificially fragmented populations exhibited a consistent pattern of higher genetic differentiation and significantly lower genetic diversity relative to the naturally fragmented populations. Thus, even in a species characterized by habitat isolation and subdivision, further artificial fragmentation appears to result in substantial population genetic consequences and may not be sustainable.