Studies of island endemism provide a unique opportunity to elucidate fundamental mechanisms of speciation. Here we examine intra- and interspecific DNA sequence variation at four unlinked genetic loci among populations of the Drosophila dunni subgroup to provide a detailed genealogical portrait of the process of speciation among these island endemic species. Our data indicate two major rounds of diversification that have shaped the D. dunni subgroup. The first occurred 1.6–2.6 million years ago and separated three major lineages, one in Puerto Rico and the Virgin Islands, a second in the northern Lesser Antilles and Barbados, and a third in St. Vincent and Grenada. A second round of diversification occurred in the last 96,000 years in the northern Lesser Antilles and Barbados. The four distinct species that resulted from this recent round of diversification maintain relatively high amounts of genetic variation, similar to that of a closely related mainland species, and share extensive ancestral polymorphism. These data suggest a minimal role for population bottlenecks linked to founder events in the history of the D. dunni subgroup. Further, the recent divergence of these island populations highlights the extremely rapid development of reproductive isolation and distinct patterns of abdominal pigmentation that has occurred in these species.