Genetic and physiological diversity was assessed in isolates of the lichen-forming fungus Xanthoria elegans originating from a range of geographic localities and climatic regimes including polar and temperate regions. In vitro cultures were established and isolates examined by production of multi-locus RAPD markers and by sequence comparison of the ITS region of the rDNA tandem repeat unit. Both molecular techniques revealed significant variability. Phylogenetic analysis of RAPD profiles (226 markers) clustered isolates from particular locations together and Mantel's test showed a correlation between genetic divergence and extent of geographic separation. Phylogenies based on ITS sequence divergence were not well supported and did not correlate with the geographic origin of samples, suggesting a single locus approach to be less informative than RAPD data in a study of this nature. Physiological investigations also revealed significant variability between isolates with different geographic origins. Temperature had a significant effect on relative growth rate (RGR) such that X. elegans originating from sites with lower mean annual temperatures had significantly higher RGRs at all test temperatures between 2 ° and 18 °C. Enhanced metabolic activity might be an adaptation for growth in colder climates. The results demonstrate high genetic diversity within this morphologically variable species in response to geographic and environmental factors, and are discussed in relation to data obtained for non-lichenised fungal species and the possibility of cryptic speciation.