Speciation processes are largely determined by the relative strength of divergent selection versus the magnitude of gene flow. The barn swallow (Hirundo rustica) has a broad geographic distribution that encompasses substantial geographic variation in morphology and behavior. The European (H. r. rustica) and East-Mediterranean (H. r. transitiva) subspecies are closely related, despite differing in morphological and life-history traits. To explore patterns of genetic differentiation and gene flow, we compared morphological and genetic variation among the nonmigratory breeding population of H. r. transitiva from Israel and the migratory population of H. r. rustica that passes through Israel and compared it with the genetic differentiation between H. r. transitiva from Israel and a breeding population of H. r. rustica from the United Kingdom that uses a different migratory flyway. Mitochondrial haplotype network analysis suggests that the European and East-Mediterranean populations are intermixed, although there was low but significant genetic differentiation between the subspecies based on both mitochondrial (F(ST) = 0.025-0.033) and microsatellite (F(ST) = 0.009-0.014) loci. Coalescent-based analyses suggest recent divergence and substantial gene flow between these populations despite their differences in morphological and behavioral traits. The results suggest that these subspecies are undergoing a differentiation process in the face of gene flow, with selection possibly operating on sexually selected traits.