Insular species frequently demonstrate different tendencies to become smaller or larger than their continental relatives. Two sibling gossamer—wing damselflies, Euphaea formosa (Odonata: Euphaeidae) from Taiwan and E. yayeyamana from the Yaeyama Islands of Japan, have no clear structural differentiation, and can only be recognized by their geographical distribution, sizes, and subtle differences in wing shape and coloration. This study combined morphometric and genetic techniques to investigate the adaptive significance of trait divergence and species status in these two Euphaea damselflies. Phylogenetic analyses of the mitochondrial cox2 sequences demonstrated that the two damselflies are monophyletic lineages and constitute valid phylogenetic species. The landmark—based geometric morphometrics indicated that the two damselflies are different morphological species characterized by distinctive wing shapes. The larger E. formosa exhibited broader hind wings, whereas E. yayeyamana had narrower and elongated forewings. The body size and wing shape variations among populations of the two species do not follow the expected pattern of neutral evolution, suggesting that the evolutionary divergence of these two traits is likely to be subjected to natural or sexual selection. The decreased body size, elongated forewings, and narrower hind wings of E. yayeyamana may represent insular adaptation to limited resources and reduced territorial competition on smaller islands.