Among tuco-tucos, Ctenomys rionegrensis is especially amenable to the study of the forces driving population differentiation because of the restricted geographic range it occupies in Uruguay. Within this limited area, the Rio Negro tuco-tuco is limited to sandy soils. It nonetheless exhibits remarkable variation in pelage color, including melanic, agouti, and dark-backed individuals. Two hypotheses have been put forth to explain this pattern: (1) local differentiation and fixation of alternative pelage types by genetic drift under limited gene flow; or (2) fixation by natural selection that may take place even in the presence of gene flow. A previous allozyme study rejected the genetic drift hypothesis on the basis of high inferred levels of migration. New estimates of gene flow from microsatellites and mitochondrial cytochrome b sequences were obtained for C. rionegrensis populations to further test these hypotheses. Much lower levels of gene flow were estimated with these more sensitive markers. Microsatellite-based estimates of gene flow are close to zero and may come closest to estimating current levels of migration. A lack of equilibrium between migration and genetic drift is also strongly suggested by the absence of an isolation-by-distance pattern found in all three genetic datasets. The microsatellite genotype data show that the species is strongly structured geographically, with subpopulations constituting distinct genetic entities. If current levels of gene flow are very low, as indicated by the new data, the local fixation of alternative alleles, including those responsible for pelage color polymorphism, is possible by drift alone. A scenario is thus proposed in which the species expanded in the recent past from a more restricted geographic range and has subsequently differentiated in near isolation, with genetic drift possibly playing a primary role in overall genetic differentiation. The local fixation of pelage color types could also be due to drift, but selection on this trait cannot be ruled out without direct analysis.