The Expansion-Contraction (EC) model predicts demographic and range contraction of temperate species during Pleistocene glaciations as a consequence of climate-related habitat changes, and provides a paradigm for explaining the high intraspecific diversity found in refugia in terms of long-term demographic stability. However, recent evidence has revealed a weak predictive power of this model for terrestrial species in insular and coastal settings. We investigated the Pleistocene EC dynamics and their evolutionary consequences on temperate species using the Maltese archipelago and its endemic lizard Podarcis filfolensis as a model system. The evolutionary and demographic history of P. filfolensis as inferred from mitochondrial and nuclear sequences data does not conform to the EC model predictions, supporting (i) demographic and spatial stability or expansion, rather than contraction, of the northern and southern lineages during the last glacial period, and (ii) a major role for allopatric differentiation primed by sea-level dynamics, rather than prolonged demographic stability, in the formation of the observed genetic diversity. When combined with evidence from other Mediterranean refugia, this study shows how the incorporation of Pleistocene sea-level variations in the EC model accounts for a reverse demographic and range response of insular and coastal temperate biotas relative to continental ones. Furthermore, this cross-archipelago pattern in which allopatric diversity is formed and shaped by EC cycles resembles that seen between isolated populations within mainland refugia and suggests that the EC model, originally developed to explain population fluctuations into and out-of refugia, may be appropriate for describing the demographic and evolutionary dynamics driving the high genetic diversity observed in these areas.