Allozyme electrophoresis was used to investigate genetic population structure among 245 individuals of the silverside Odontesthes argentinensis sampled from localities in southern Brazil and Uruguay. Striking differences in allozyme frequencies and genetic variability were detected among localities. Analysis of these differences indicated two distinct populations: one distributed in a wide marine coastal zone; and one in the peripheral environment of the Patos Lagoon estuary in southern Brazil. The population in Patos Lagoon appears to have originated from an ancestral marine population and been established in the estuary by a founder effect. The extent and pattern of genetic divergence found in our study, the existence of diverse reproductive strategies in the estuarine silversides, and differences in morphology of eggs and larvae, indicate that speciation is taking place in Patos Lagoon. It is suggested that the two populations should be considered separately when formulating management and conservation strategies.