New Zealand's endemic Stewart Island Shag (Leucocarbo chalconotus) comprises two regional groups (Otago and Foveaux Strait) that show consistent differentiation in relative frequencies of pied versus dark-bronze morphotypes, the extent of facial carunculation, body size and breeding time. We used modern and ancient DNA (mitochondrial DNA control region one), and morphometric approaches to investigate the phylogeography and taxonomy of L. chalconotus and its closely related sister species, the endemic Chatham Island Shag (L. onslowi). Our analysis shows Leucocarbo shags in southern New Zealand comprise two well-supported clades, each containing both pied and dark-bronze morphs. However, the combined monophyly of these populations is not supported, with the L. chalconotus Otago lineage sister to L. onslowi. Morphometric analysis indicates that Leucocarbo shags from Otago are larger on average than those from Foveaux Strait. Principal co-ordinate analysis of morphometric data showed substantial morphological differentiation between the Otago and Foveaux Strait clades, and L. onslowi. The phylogeographic partitioning detected within L. chalconotus is marked, and such strong structure is rare for phalacrocoracid species. Our phylogenetic results, together with consistent differences in relative proportions of plumage morphs and facial carunculation, and concordant differentiation in body size and breeding time, suggest several alternative evolutionary hypotheses that require further investigation to determine the level of taxonomic distinctiveness that best represents the L. chalconotus Otago and Foveaux Strait clades.