The association between population dynamics and genetic variability is of fundamental importance for both evolutionary and conservation biology. We combined long-term population monitoring and molecular genetic data from 123 offspring and their parents at 28 microsatellite loci to investigate changes in genetic diversity over 14 cohorts in a small and relatively isolated population of mountain goats (Oreamnos americanus) during a period of demographic increase. Offspring heterozygosity decreased while parental genetic similarity and inbreeding coefficients (FIS) increased over the study period (1995–2008). Immigrants introduced three novel alleles into the population and matings between residents and immigrants produced more heterozygous offspring than local crosses, suggesting that immigration can increase population genetic variability. The population experienced genetic drift over the study period, reflected by a reduced allelic richness over time and an ‘isolation-by-time’ pattern of genetic structure. The temporal decline of individual genetic diversity despite increasing population size probably resulted from a combination of genetic drift due to small effective population size, inbreeding and insufficient counterbalancing by immigration. This study highlights the importance of long-term genetic monitoring to understand how demographic processes influence temporal changes of genetic diversity in long-lived organisms.