The water mouse, Xeromys myoides, is currently recognised as a vulnerable species in Australia, inhabiting a small number of distinct and isolated coastal regions of Queensland and the Northern Territory. An examination of the evolutionary history and contemporary influences shaping the genetic structure of this species is required to make informed conservation management decisions. Here, we report the first analysis undertaken on the phylogeography and population genetics of the water mouse across its mainland Australian distribution. Genetic diversity was assessed at two mitochondrial DNA (Cytochrome b, 1000 bp; D-loop, 400 bp) and eight microsatellite DNA loci. Very low genetic diversity was found, indicating that water mice underwent a recent expansion throughout their Australian range and constitute a single evolutionarily significant unit. Microsatellite analyses revealed that the highest genetic diversity was found in the Mackay region of central Queensland; population substructure was also identified, suggesting that local populations may be isolated in this region. Conversely, genetic diversity in the Coomera region of south-east Queensland was very low and the population in this region has experienced a significant genetic bottleneck. These results have significant implications for future management, particularly in terms of augmenting populations through translocations or reintroducing water mice in areas where they have gone extinct.