Gene flow can inhibit evolutionary divergence by eroding genetic differences between populations. A current aim in speciation research is to identify conditions in which selection overcomes this process. We focused on a state of limited differentiation, asking whether selection enables divergence with gene flow in a set of Habronattus americanus jumping spider populations that exhibit three distinct male sexual display morphs. We found that each population is at high frequency or fixed for a single morph. These strong phenotypic differences contrast with low divergence at 210 AFLP markers, suggesting selection has driven or maintains morph divergence. Coinciding patterns of isolation by distance and ‘isolation by phenotype’ (i.e. increased genetic divergence among phenotypically contrasting populations) across the study area support several alternative demographic hypotheses for display divergence, each of which entails gene flow. Display-associated structure appears broadly distributed across the genome and the markers producing this pattern do not stand out from background levels of differentiation. Overall, the results suggest selection can promote stark sexual display divergence in the face of gene flow among closely related populations.