Geographical isolation by oceanic barriers and climatic stability has been postulated as some of the main factors driving diversification within volcanic archipelagos. However, few studies have focused on the effect that catastrophic volcanic events have had on patterns of within-island differentiation in geological time. This study employed data from the chloroplast (cpDNA haplotypes) and the nuclear (AFLPs) genomes to examine the patterns of genetic variation in Canarina canariensis, an iconic plant species associated with the endemic laurel forest of the Canary Islands. We found a strong geographical population structure, with a first divergence around 0.8 Ma that has Tenerife as its central axis and divides Canarian populations into eastern and western clades. Genetic diversity was greatest in the geologically stable ‘palaeo-islands’ of Anaga, Teno and Roque del Conde; these areas were also inferred as the ancestral location of migrant alleles towards other disturbed areas within Tenerife or the nearby islands using a Bayesian approach to phylogeographical clustering. Oceanic barriers, in contrast, appear to have played a lesser role in structuring genetic variation, with intra-island levels of genetic diversity larger than those between-islands. We argue that volcanic eruptions and landslides after the merging of the palaeo-islands 3.5 Ma played key roles in generating genetic boundaries within Tenerife, with the palaeo-islands acting as refugia against extinction, and as cradles and sources of genetic diversity to other areas within the archipelago.