The high prevalence of rare genetic diseases in Finland has been attributed to a founder effect some 2,000 years ago. However, this hypothesis has not been supported from mtDNA sequence and autosomal microsatellite data which indicate high levels of gene diversity. Here we have identified genetic evidence for a population bottleneck by examining variable microsatellite loci on the nonrecombining portion of Y chromosomes from Finland and four populations from Europe and the Americas. Sequence data from segment I of the control region (HVS-1) of mtDNA (360 bases) and 20 autosomal dinucleotide repeat markers were also analyzed. Partitions of genetic variance within and between populations revealed significant levels of Y-chromosome differentiation between populations. Phylogenetic and diversity analyses revealed divergent Finnish Y-haplotype clades and significantly lower Y-haplotype diversity among Finns as compared to other populations. Surprisingly, Finnish Y-haplotype diversity was even lower than the Native American populations. These results provide support for the Finnish bottleneck hypothesis. Evidence for two separate founding Finnish Y-chromosome lineages was also observed from the Y-chromosome phylogeny. A limited number of closely related founding males may have contributed to the low number of paternal lineages in the Finnish population. In contrast, high levels of genetic diversity for mtDNA and autosomal STRs may be the result of sex-biased gene flow and recent immigration to urban areas from established internal isolates within Finland.