Although fragmented rainforest environments represent hotspots for invertebrate biodiversity, few genetic studies have been conducted on rainforest invertebrates. Thus, it is not known if invertebrate species in rainforests are highly genetically fragmented, with the potential for populations to show divergent selection responses, or if there are low levels of gene flow sufficient to maintain genetic homogeneity among fragmented populations. Here we use microsatellite markers and DNA sequences from the mitochondrial ND5 locus to investigate genetic differences among Drosophila birchii populations from tropical rainforests in Queensland, Australia. As found in a previous study, mitochondrial DNA diversity was low with no evidence for population differentiation among rainforest fragments. The pattern of mitochondrial haplotype variation was consistent with D. birchii having undergone substantial past population growth. Levels of nuclear genetic variation were high in all populations while F-ST values were very low, even for flies from geographically isolated areas of rainforest. No significant differentiation was observed between populations on either side of the Burdekin Gap (a long-term dry corridor), although there was evidence for higher gene diversity in low-latitude populations. Spatial autocorrelation coefficients were low and did not differ significantly from random, except for one locus which revealed a clinal-like pattern. Comparisons of microsatellite differentiation contrasted with previously established clinal patterns in quantitative traits in D. birchii, and indicate that the patterns in quantitative traits are likely to be due to selection. These results suggest moderate gene flow in D. birchii over large distances. Limited population structure in this species appears to be due to recent range expansions or cycles of local extinctions followed by recolonizations/expansions. Nevertheless, patterns of local adaptation have developed in D. birchii that may result in populations showing different selection responses when faced with environmental change.