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The progressive decline in red squirrel (Sciurus vulgaris) numbers in Wales has led to conservation and reintroduction projects being established on the island of Anglesey. The recovery of the island’s remnant wild population was initially successful, however concern remained over potential loss of genetic diversity resulting from an observed demographic bottleneck. We used mitochondrial DNA (mtDNA) control region sequences and six microsatellite loci to assess current levels of genetic variation in the population. Samples were monomorphic for control region sequences and a historic specimen from the same area carrying a different haplotype demonstrated a loss of mtDNA diversity during the last 20 years. Inclusion of other Welsh haplotypes indicated phylogeographic structure in the region, in contrast to previous UK studies. Genotyping results showed allelic diversity and heterozygosity to be less than 50% of that recorded in other UK populations, with strong evidence for a recent genetic bottleneck. A parallel reintroduction programme on Anglesey included genetic analysis of individuals during the selection of captive breeding pairs. We present analysis of sequence and microsatellite data, and subsequent management decisions taken to maximise diversity in the founder and F1 generations. Population and Habitat Viability Analysis applied to both populations modelled future levels of heterozygosity and allelic diversity. Supplementation of the remnant and reintroduced populations with translocated squirrels was simulated as a potential management tool; results support use of this strategy to reduce loss of diversity and increase survival. The limitations of applying conservation genetic theory within small-scale management projects are discussed. [ABSTRACT FROM AUTHOR]