Visual signals play a vital role in many animal communication systems. Signal design, however, often varies within species, raising evolutionarily important questions concerning the maintenance of phenotypic diversity. We analysed nuptial colour variation within and among nine populations of southern pygmy perch (Nannoperca australis Gunther) along an environmental light gradient. Within populations, larger males were redder and blacker, and better-condition males were blacker. Among populations, red colour was positively correlated with the amount of orange-red light present, suggesting that males are likely optimizing signal conspicuousness by producing proportionally larger and redder patches in broad spectrum environments with more orange-red light. Signal contrast, in this regard, is maximized when red colour, appearing bright because of the prevalence of red wavelengths, is viewed against the water-column background. Together, our results are concordant with the sensory drive hypothesis; selection favours signal adaptations or signal plasticity to ensure communication efficacy is maximized in different light environments.