Understanding the causes of population decline is crucial for conservation management. We therefore used genetic analysis both to provide baseline data on population structure and to evaluate hypotheses for the catastrophic decline of the South American sea lion (Otaria flavescens) at the Falkland Islands (Malvinas) in the South Atlantic. We genotyped 259 animals from 23 colonies across the Falklands at 281 bp of the mitochondrial hypervariable region and 22 microsatellites. A weak signature of population structure was detected, genetic diversity was moderately high in comparison with other pinniped species, and no evidence was found for the decline being associated with a strong demographic bottleneck. By combining our mitochondrial data with published sequences from Argentina, Brazil, Chile and Peru, we also uncovered strong maternally directed population structure across the geographical range of the species. In particular, very few shared haplotypes were found between the Falklands and South America, and this was reflected in correspondingly low migration rate estimates. These findings do not support the prominent hypothesis that the decline was caused by migration to Argentina, where large-scale commercial harvesting operations claimed over half a million animals. Thus, our study not only provides baseline data for conservation management but also reveals the potential for genetic studies to shed light upon long-standing questions pertaining to the history and fate of natural populations.