The conditions of phenotypic and genetic population differentiation allow inferences about the evolution, preservation and loss of biological diversity. In Lake Tanganyika, water level fluctuations are assumed to have had a major impact on the evolution of stenotopic littoral species, though this hypothesis has not been specifically examined so far. The present study investigates whether subtly differentiated color patterns of adjacent Tropheus moorii populations are maintained in isolation or in the face of continuous gene flow, and whether the presumed influence of water level fluctuations on lacustrine cichlids can be demonstrated in the small-scale population structure of the strictly stenotopic, littoral Tropheus. Distinct population differentiation was found even across short geographic distances and minor habitat barriers. Population splitting chronology and demographic histories comply with our expectation of old and rather stable populations on steeper sloping shore, and more recently established populations in a shallower region. Moreover, population expansions seem to coincide with lake level rises in the wake of Late Pleistocene megadroughts ~100 KYA. The imprint of hydrologic events on current population structure in the absence of ongoing gene flow suggests that phenotypic differentiation among proximate Tropheus populations evolves and persists in genetic isolation. Sporadic gene flow is effected by lake level fluctuations following climate changes and controlled by the persistence of habitat barriers during lake level changes. Since similar demographic patterns were previously reported for Lake Malawi cichlids, our data furthermore strengthen the hypothesis that major climatic events synchronized facets of cichlid evolution across the East African Great Lakes.