Many freshwater and marine algal species are described as having cosmopolitan distributions. Whether these widely distributed morphologically similar algae also share a similar gene pool remains often unclear. In the context of island biogeography theory, stronger spatial isolation deemed typical of freshwater lakes should restrict gene flow and lead to higher genetic differentiation among lakes. Using nine microsatellite loci, we investigate the genetic diversity of a widely distributed freshwater planktonic diatom, Asterionella formosa, across different lakes in Switzerland and the Netherlands. We applied a hierarchical spatial sampling design to determine the geographical scale at which populations are structured. A subset of the isolates was additionally analysed using amplified fragment length polymorphism (AFLP) markers. Our results revealed complex and unexpected population structure in A. formosa with evidence for both restricted and moderate to high gene flow at the same time. Different genetic markers (microsatellites and AFLPs) analysed with a variety of multivariate methods consistently revealed that genetic differentiation within lakes was much stronger than among lakes, indicating the presence of cryptic species within A. formosa. We conclude that the hidden diversity found in this study is expected to have implications for the further use of A. formosa in biogeographical, conservation and ecological studies. Further research using species-level phylogenetic markers is necessary to place the observed differentiation in an evolutionary context of speciation.