Variation in gene content has been hypothesized to be the primary mode of adaptive evolution in microorganisms; however, very little is known about the spatial and temporal distribution of variable genes. Through population-scale comparative genomics of 7 Sulfolobus islandicus genomes from 3 locations, we demonstrate the biogeographical structure of the pan-genome of this species, with no evidence of gene flow between geographically isolated populations. The evolutionary independence of each population allowed us to assess genome dynamics over very recent evolutionary time, beginning approximately 910,000 years ago. On this time scale, genome variation largely consists of recent strain-specific integration of mobile elements. Localized sectors of parallel gene loss are identified; however, the balance between the gain and loss of genetic material suggests that S. islandicus genomes acquire material slowly over time, primarily from closely related Sulfolobus species. Examination of the genome dynamics through population genomics in S. islandicus exposes the process of allopatric speciation in thermophilic Archaea and brings us closer to a generalized framework for understanding microbial genome evolution in a spatial context.