Homoploid hybrid speciation is thought to require unusual circumstances to yield reproductive isolation from the parental species, and few examples are known from nature. Here, we present genetic evidence for this mode of speciation in birds. Using Bayesian assignment analyses of 751 individuals genotyped for 14 unlinked, nuclear microsatellite loci, we show that the phenotypically intermediate Italian sparrow (Passer italiae) does not form a cluster of its own, but instead exhibits clear admixture (over its entire breeding range) between its putative parental species, the house sparrow (P. domesticus) and the Spanish sparrow (P. hispaniolensis). Further, the Italian sparrow possesses mitochondrial (mt) DNA haplotypes identical to both putative parental species (although mostly of house sparrow type), indicating a recent hybrid origin. Today, the Italian sparrow has a largely allopatric distribution on the Italian peninsula and some Mediterranean islands separated from its suggested parental species by the Alps and the Mediterranean Sea, but co-occurs with the Spanish sparrow on the Gargano peninsula in southeast Italy. No evidence of interbreeding was found in this sympatric population. However, the Italian sparrow hybridizes with the house sparrow in a sparsely populated contact zone in the Alps. Yet, the contact zone is characterized by steep clines in species-specific male plumage traits, suggesting that partial reproductive isolation may also have developed between these two taxa. Thus, geographic and reproductive barriers restrict gene flow into the nascent hybrid species. We propose that an origin of hybrid species where the hybrid lineage gets geographically isolated from its parental species, as seems to have happened in this system, might be more common in nature than previously assumed.