Seagrass ecosystems fulfill ecologically and economically valuable functions in coastal marine environments. Unfortunately, seagrass beds are susceptible to natural and human disturbances, and their distrubution is declining worldwide. Although intentional disturbance of seagrass beds must be mitigated pursuant to U.S. law, to date mitigation of seagrass beds has not prevented a net loss of habitat. Transplantation of vegetative material from small areas of nearby beds is the primary method of seagrass mitigation. Restoration research on seagrasses has focused primarily on establishment of the plants and secondarily on the functional equivalency of the habitats. We questioned whether transplanted seagrass beds were comparable to “natural” beds in terms of genetic diversity and structure. We sampled Zostera marina L. (eel-grass) from 12 sites in the highly urbanized area of San Diego County and from pristine sites in Baja California. Using allozyme electrophoresis, we determined that genetic diversity (percentage of polymorphic loci, allele richness, expected and observed heterozygosities, and proportion of genetically unique individuals) was significantly reduced in transplanted eelgrass beds. Eelgrass from Baja California exhibited the highest genetic diversity. Based on Wright's F statistics, most of the genetic variation was distributed within rather than among sites (FST= 0.139), and the degree of genetic structure was only moderate at the greatest geographical scale (San Diego—Baja). Using a spatial statistical analysis (second-order analysis), we found virtually no evidence for nonrandom distribution of alleles or genotypes at scales of 3–50 m within beds. We discuss several hypotheses for reduced genetic diversity in transplanted eelgrass beds, including transplantation protocol, small size of transplantations, and reduced or failed sexual reproduction.