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Adaptive variation tends to emerge clinally along environmental gradients or discretely among habitats with limited connectivity. However, in Atlantic killifish (Fundulus heteroclitus), a population genetic discontinuity appears in the absence of obvious barriers to gene flow along parallel salinity dines and coincides with a physiologically stressful salinity. We show that populations resident on either side of this discontinuity differ in their abilities to compensate for osmotic shock and illustrate the physiological and functional genomic basis of population variation in hypoosmotic tolerance. A population native to a freshwater habitat, upstream of the genetic discontinuity, exhibits tolerance to extreme hypoosmotic challenge, whereas populations native to brackish or marine habitats downstream of the discontinuity lose osmotic homeostasis mare severely and take longer to recover. Comparative transcriptomics reveals a core transcriptional response associated with acute and acclimatory responses to hypoosmotic shock and posits unique mechanisms that enable extreme osmotic tolerance. Of the genes that vary in expression among populations, those that are putatively involved in physiological acclimation are more likely to exhibit nonneutral patterns of divergence between freshwater and brackish populations. It is not the well-known effectors of osmotic acclimation, but rather the lesser-known immediate early responses, that appear important in contributing to population differences. [ABSTRACT FROM AUTHOR]