Alpine biotas are paradigmatic of the countervailing roles of geographical isolation and dispersal during diversification. In temperate regions, repeated distributional shifts driven by Pleistocene climatic oscillations produced both recurrent pulses of population fragmentation and opportunities for gene flow during range expansions. Here, we test whether a model of divergence in isolation vs. with gene flow is more likely in the diversification of flightless alpine grasshoppers of the genus Podisma from the Iberian Peninsula. The answer to this question can also provide key insights about the pace of evolution. Specifically, if the data fit a divergence in isolation model, this suggests rapid evolution of reproductive isolation. Genomic data confirm a Pleistocene origin of the species complex, and multiple analytical approaches revealed limited asymmetric historical hybridization between two taxa. Genomic‐based demographic reconstructions, spatial patterns of genetic structure and range shifts inferred from palaeodistribution modelling suggest severe range contraction accompanied by declines in effective population sizes during interglacials (i.e., contemporary populations confined to sky islands are relicts) and expansions during the coldest stages of the Pleistocene in each taxon. Although limited hybridization during secondary contact leads to phylogenetic uncertainty if gene flow is not accommodated when estimating evolutionary relationships, all species exhibit strong genetic cohesiveness. Our study lends support to the notion that the accumulation of incipient differences during periods of isolation were sufficient to lead to lineage persistence, but also that the demographic changes, dispersal constraints and spatial distribution of the sky islands themselves mediated species diversification in temperate alpine biotas.