The squirrel glider Petaurus norfolcensis occurs across a broad Australian latitudinal range that includes gaps in distribution and potential biogeographic barriers, creating the potential for evolution of distinct entities within this species. Because of the species threatened status in the southern part of its range, we tested for the presence of geographically based independent evolutionary units among gliders sampled from southern, and northern coastal populations, using sequences of mitochondrial cytochrome b DNA (mtDNA) and a set of five nuclear microsatellites in 258 individuals. Our analyses suggest that an initial northward colonisation in the early- to mid-Pleistocene was followed by isolation by distance and, eventually, divergence between the sampled coastal and southern populations in the mid- to late-Pleistocene. We propose that the previously large and diverse southern populations have declined coincidentally with the replacement of wet forests by open sclerophyll woodlands during the preceding few million years. By contrast coastal populations further north appear to have been expanding and at present have an effective population size several times greater than southern populations. These results suggest that the two forms are on different evolutionary trajectories and should be treated separately for conservation purposes. It is highly desirable that loss of southern populations be prevented to maintain the unique genetic diversity accumulated over a considerable evolutionary timescale.