Dispersal is crucial for gene flow and often determines the long-term stability of meta-populations, particularly in rare species with specialized life cycles. Such species are often foci of conservation efforts because they suffer disproportionally from degradation and fragmentation of their habitat. However, detailed knowledge of effective gene flow through dispersal is often missing, so that conservation strategies have to be based on mark–recapture observations that are suspected to be poor predictors of long-distance dispersal. These constraints have been especially severe in the study of butterfly populations, where microsatellite markers have been difficult to develop. We used eight microsatellite markers to analyse genetic population structure of the Large Blue butterfly Maculinea arion in Sweden. During recent decades, this species has become an icon of insect conservation after massive decline throughout Europe and extinction in Britain followed by reintroduction of a seed population from the Swedish island of Öland. We find that populations are highly structured genetically, but that gene flow occurs over distances 15 times longer than the maximum distance recorded from mark–recapture studies, which can only be explained by maximum dispersal distances at least twice as large as previously accepted. However, we also find evidence that gaps between sites with suitable habitat exceeding ∼20 km induce genetic erosion that can be detected from bottleneck analyses. Although further work is needed, our results suggest that M. arion can maintain fully functional metapopulations when they consist of optimal habitat patches that are no further apart than ∼10 km.