Islands foster unique biodiversity, yet also present biogeographic limitations that impose increased risk for population extinction through demographic and genetic constraints and decreased probability of surviving a catastrophe. Of particular interest, especially with regard to endangered species, is the genetic response of insular species to severe population declines or translocations. Both types of events, considered population bottlenecks, are expected to reduce genetic variation, and correspondingly, adaptive potential. For these reasons, it is important to understand how bottlenecks interact with insular population dynamics to affect genetic diversity. I used a combination of a laboratory model experiment and population genetics study of an in situ bottleneck in an endangered species to investigate how quantitative and molecular genetic variation are affected during bottlenecks. I used a laboratory animal model (red flour beetle, Tribolium castaneum) to compare how quantitative genetic variation is affected if a serial bottleneck occurs in a novel versus familiar environment. The experiment was designed to model a founder event or translocation to a new island with a novel environment. I found that phenotypic and additive variance for a quantitative trait were larger following a bottleneck occurring in the novel environment, suggesting that the novel environment could improve adaptive potential in bottlenecked populations. Next, I used molecular genetic markers to assess variation and signatures of selection in the Laysan finch (Telespiza cantans), a Hawaiian honeycreeper endemic to a small Northwestern Hawaiian island. Laysan finches experienced a major bottleneck on Laysan in the early 20th century, followed by a translocation and series of founder events as populations were established on the islets of Pearl and Hermes Reef (PHR) in the 1960s – 70s. I found that, contrary to expectation, bottlenecked Laysan finch populations did not show declines in genetic variation and were not differentiated as a result of genetic drift. These results are potentially caused by insular demographic dynamics. I identified loci with extreme differentiation between modern populations, potentially indicating genomic signals of selection. These regions could be important for adaptation to the novel environment on PHR and are candidates for future study.