Interactions between short-beaked common dolphins Delphinus delphis and the fishing industry of South Australia (SA) have lead to serious concerns over the long-term viability of the local dolphin population. Common dolphins are gregarious animals with high vagility and are expected to display limited genetic differentiation over large spatial scales. Here, we investigate population genetic structure of southern Australian common dolphins using mitochondrial DNA control region sequences and seven microsatellite markers. We found unexpected levels of genetic differentiation for short-beaked common dolphins over a distance of ∼1500 km. Although no genetic structure was observed in common dolphins along the coast of SA, we detected marked differentiation between dolphins from SA and south-eastern Tasmania, suggesting a minimum of two genetic populations in southern Australia. We hypothesize that the ephemeral distribution of small pelagic fish enhances movement and dispersal between dolphin groups at a local level. However, clear differences in water temperature, habitat features and fish abundance between SA and Tasmania may contribute to the contemporary isolation observed between dolphin populations. Our findings have important consequences for developing conservation management strategies, because SA has the largest purse-seine fishery by weight in Australia, and substantial numbers of fatal common dolphin interactions have occurred. In 2004/2005 alone, an estimated 1728 common dolphins were encircled and 377 died over a 7-month period. If these impacts lead to a reduction in population size, it is unlikely that dolphins from the adjacent south-eastern Tasmanian population will replace the lost individuals. Recommendations for assessing the impacts of the fishery are presented. The information herein may also have implications for fisheries–marine mammal interactions in coastal and neritic habitats in other areas of the world. Moreover, we demonstrate that a species commonly thought to be wide ranging can show an unexpected degree of genetic differentiation.