Colonization is crucial to habitat restoration projects that rely on the spontaneous regeneration of the original vegetation. However, as a previously declining plant species spreads again, the likelihood of founder effects increases through recurrent population founding and associated serial bottlenecks. We related Amplified Fragment Length Polymorphism markers genetic variation and fitness to colonization history for all extant populations of the outcrossing terrestrial orchid Dactylorhiza incarnata in an isolated coastal dune complex. Around 1970, D. incarnata suffered a severe bottleneck yet ultimately persisted and gradually spread throughout the spatially segregated dune slacks, aided by the restoration of an open vegetation. Genetic assignment demonstrated dispersal to vacant sites from few nearby extant populations and very limited inflow from outside the spatially isolated reserve. Results further indicated that recurrent founding from few local sources resulted in the loss of genetic diversity and promoted genetic divergence (FST = 0.35) among populations, but did not influence population fitness. The few source populations initially available and the limited inflow of genes from outside the study reserve, as a consequence of habitat degradation and spatial isolation, may have magnified the genetic effects of recurrent population founding.