Association mapping enables the detection of marker-trait associations in unstructured populations by taking advantage of historical linkage disequilibrium (LD) that exists between a marker and the true causative polymorphism of the trait phenotype. Our first objective was to understand the pattern of LD decay in the diploid alfalfa genome. We used 89 highly polymorphic SSR loci in 374 unimproved diploid alfalfa (Medicago sativa L.) genotypes from 120 accessions to infer chromosome-wide patterns of LD. We also sequenced four lignin biosynthesis candidate genes (caffeoyl-CoA 3-O-methyltransferase (CCoAoMT), ferulate-5-hydroxylase (F5H), caffeic acid-O-methyltransferase (COMT), and phenylalanine amonialyase (PAL 1)) to identify single nucleotide polymorphisms (SNPs) and infer within gene estimates of LD. As the second objective of this study, we conducted association mapping for cell wall components and agronomic traits using the SSR markers and SNPs from the four candidate genes. We found very little LD among SSR markers implying limited value for genomewide association studies. In contrast, within gene LD decayed within 300 bp below an r2 of 0.2 in three of four candidate genes. We identified one SSR and two highly significant SNPs associated with biomass yield. Based on our results, focusing association mapping on candidate gene sequences will be necessary until a dense set of genome-wide markers is available for alfalfa. Electronic supplementary material The online version of this article (doi:10.1007/s00122-012-1854-2) contains supplementary material, which is available to authorized users.