Isolation and restricted gene flow can lead to genetic deterioration in populations. Populations of many species are increasingly becoming fragmented due to human impacts and active management is required to prevent further extinctions. Islands provide an ideal location to protect species from many mainland threatening processes such as habitat loss and fragmentation, disease and competition/predation from introduced species. However their isolation and small population size renders them prone to loss of genetic diversity and to inbreeding. This study examined two endemic and one introduced population of tammar wallaby (Macropus eugenii) on three islands in the Houtman Abrolhos Archipelago, Western Australia: East Wallabi, West Wallabi and North Islands. Nine autosomal and four Y-linked microsatellite loci, and sequence data from the mitochondrial DNA (mtDNA) control region were used to examine the impact of long-term isolation (East and West Wallabi Is.) and small founder size (North Is.) on genetic diversity and inbreeding. This study found all three populations had low genetic diversity, high levels of effective inbreeding and increased frequency of morphological abnormalities. Isolation has also led to significant inter-population genetic differentiation. These results highlight the importance of incorporating genetic management strategies when utilising islands as refuges for declining mainland populations.