The Hengduan Mountains (HDM) biodiversity hotspot exhibits exceptional alpine plant diversity. Here, we investigate factors driving intraspecific divergence within a HDM alpine species Salix brachista (Cushion willow), a common component of subnival assemblages. We produce a high-quality genome assembly for this species and characterize its genetic diversity, population structure and pattern of evolution by resequencing individuals collected across its distribution. We detect population divergence that has been shaped by a landscape of isolated sky island-like habitats displaying strong environmental heterogeneity across elevational gradients, combined with population size fluctuations that have occurred since approximately the late Miocene. These factors are likely important drivers of intraspecific divergence within Cushion willow and possibly other alpine plants with a similar distribution. Since intraspecific divergence is often the first step toward speciation, the same factors can be important contributors to the high alpine species diversity in the HDM.