Individuals are generally predicted to avoid inbreeding because of detrimental fitness effects. However, several recent studies have shown that limited inbreeding is tolerated by some vertebrate species. Here, we examine the costs and benefits of inbreeding in a largely polygynous rodent, the yellow-bellied marmot (Marmota flaviventris). We use a pedigree constructed from 8 years of genetic data to determine the relatedness of all marmots in our study population and examine offspring survival, annual male reproductive success, relatedness between breeding pairs and the effects of group composition on likelihood of male reproduction to assess inbreeding in this species. We found decreased survival in inbred offspring, but equal net reproductive success among males that inbred and those that avoided it. Relatedness between breeding pairs was greater than that expected by chance, indicating that marmots do not appear to avoid breeding with relatives. Further, male marmots do not avoid inbreeding: males mate with equal frequency in groups composed of both related and unrelated females and in groups composed of only female relatives. Our results demonstrate that inbreeding can be tolerated in a polygynous species if the reproductive costs of inbreeding are low and individuals that mate indiscriminately do not suffer decreased reproductive success.