Elucidation of the evolutionary processes that constrain or facilitate adaptive divergence is a central goal in evolutionary biology, especially in non-model organisms. We tested whether changes in dynamics of gene flow (historical vs contemporary) caused population isolation and examined local adaptation in response to environmental selective forces in fragmented Rhododendron oldhamii populations. Variation in 26 expressed sequence tag-simple sequence repeat loci from 18 populations in Taiwan was investigated by examining patterns of genetic diversity, inbreeding, geographic structure, recent bottlenecks, and historical and contemporary gene flow. Selection associated with environmental variables was also examined. Bayesian clustering analysis revealed four regional population groups of north, central, south and southeast with significant genetic differentiation. Historical bottlenecks beginning 9168–13,092 years ago and ending 1584–3504 years ago were revealed by estimates using approximate Bayesian computation for all four regional samples analyzed. Recent migration within and across geographic regions was limited. However, major dispersal sources were found within geographic regions. Altitudinal clines of allelic frequencies of environmentally associated positively selected outliers were found, indicating adaptive divergence. Our results point to a transition from historical population connectivity toward contemporary population isolation and divergence on a regional scale. Spatial and temporal dispersal differences may have resulted in regional population divergence and local adaptation associated with environmental variables, which may have played roles as selective forces at a regional scale.