Species diversity is high in the Himalaya-Hengduan Mountains, particularly at the edges characterized by deep ravines and “sky islands”. Studies focused on sky-island species are sparse and the patterns observed in response to both geographic and climatic factors are inconsistent. Here phylogeographic and phylogenetic analyses of Gaultheria nummularioides, a species originating in the late Pliocene with its main distribution in the Himalaya-Hengduan Mountains, were conducted to reveal the pattern of genetic dynamics in response to physical geography, glacial fluctuations, and monsoons. We found that in this species genetic variation is higher among populations than within populations, with a significant phylogeographic boundary between the central Himalaya and the eastern Himalaya and the Hengduan Mountains. We also found a high incidence of private alleles, possibly associated with strong habitat isolation. The phylogeographic pattern recovered is consistent with populations in glacial refugia that have experienced expansion after glaciation. The divergence times of most haplotypes coincide with the time of the weakening of the Asian monsoon in these regions. Models of geographic range size showed a significant decrease from the Last Interglacial through the Last Glacial Maximum to the Current, and a predicted increase from the Current to the year 2070. Our study provides insights for understanding speciation among sky islands in this region.