Few studies have evaluated how effectively environmental contamination may reduce genetic diversity of a population. Here, we chose a laboratory approach in order to test if tributyltin (TBT) exposure at environmentally relevant concentrations leads to reduced genetic variation in the midge Chironomus riparius. Two TBT-exposed and two unexposed experimental populations were reared simultaneously in the laboratory for 12 generations. We recorded several life-history traits in each generation and monitored genetic variation over time using five variable microsatellite markers. TBT-exposed strains showed increased larval mortality (treatments: 43.8%; controls: 27.8%), slightly reduced reproductive output, and delayed larval development. Reduction of genetic variation was strongest and only significant in the TBT-exposed strains (treatments: -45.9%, controls: -24.4% of initial heterozygosity) after 12 generations. Our findings document that chemical pollution may lead to a rapid decrease in genetic diversity, which has important implications for conservation strategies and ecological management in polluted environments.