It is well appreciated that historical and ecological processes are important determinates of freshwater biogeographic assemblages. Phylogeography can potentially lend important insights into the relative contribution of historical processes in biogeography. However, the extent that phylogeography reflects historical patterns of drainage connection may depend in large part on the dispersal capability of the species. Here, we test the hypothesis that due to their relatively greater dispersal capabilities, the neotropical cichlid species Andinoacara coeruleopunctatus will display a phylogeographic pattern that differs from previously described biogeographic assemblages in this important region. Based on an analysis of 318 individuals using mtDNA ATPase 6/8 sequence and restriction fragment length polymorphism data, we found eight distinct clades that are closely associated with biogeographic patterns. The branching patterns among the clades and a Bayesian clock analysis suggest a relatively rapid colonization and diversification among drainages in the emergent Isthmus of Panama followed by the coalescing of some drainages due to historical connections. We also present evidence for extensive cross-cordillera sharing of clades in central Panama and the Canal region. Our results suggest that contemporary phylogeographic patterns and diversification in Lower Central American fishes reflect an interaction of historical drainage connections, dispersal, and demographic processes.