The world's most endangered canid is the Ethiopian wolf Canis simensis, which is found in six isolated areas of the Ethiopian highlands with a total population of no more than 500 individuals. Ethiopian wolf populations are declining due to habitat loss and extermination by humans. Moreover, in at least one population, Ethiopian wolves are sympatric with domestic dogs, which may hybridize with them, compete for food, and act as disease vectors. Using molecular techniques, we address four questions concerning Ethiopian wolves that have conservation implications. First, we determine the relationships of Ethiopian wolves to other wolf-like canids by phylogenetic analysis of 2001 base pairs of mitochondrial DNA (mtDNA) sequence. Our results suggest that the Ethiopian wolf is a distinct species more closely related to gray wolves and coyotes than to any African canid. The mtDNA sequence similarity with gray wolves implies that the Ethiopian wolf may hybridize with domestic dogs, a recent derivative of the gray wolf. We examine this possibility through mtDNA restriction fragment analysis and analysis of nine microsatellite loci in populations of Ethiopian wolves. The results imply that hybridization has occurred between female Ethiopian wolves and male domestic dogs in one population. Finally, we assess levels of variability within and between two Ethiopian wolf populations. Although these closely situated populations are not differentiated, the level of variability in both is low, suggesting long-term effective population sizes of less than a few hundred individuals. We recommend immediate captive breeding of Ethiopian wolves to protect their gene pool from dilution and further loss of genetic variability.