Genomic resources developed for domesticated species provide powerful tools for studying the evolutionary history of their wild relatives. Here we use 61K single-nucleotide polymorphisms (SNPs) evenly spaced throughout the canine nuclear genome to analyse evolutionary relationships among the three largest European populations of grey wolves in comparison with other populations worldwide, and investigate genome-wide effects of demographic bottlenecks and signatures of selection. European wolves have a discontinuous range, with large and connected populations in Eastern Europe and relatively smaller, isolated populations in Italy and the Iberian Peninsula. Our results suggest a continuous decline in wolf numbers in Europe since the Late Pleistocene, and long-term isolation and bottlenecks in the Italian and Iberian populations following their divergence from the Eastern European population. The Italian and Iberian populations have low genetic variability and high linkage disequilibrium, but relatively few autozygous segments across the genome. This last characteristic clearly distinguishes them from populations that underwent recent drastic demographic declines or founder events, and implies long-term bottlenecks in these two populations. Although genetic drift due to spatial isolation and bottlenecks seems to be a major evolutionary force diversifying the European populations, we detected 35 loci that are putatively under diversifying selection. Two of these loci flank the canine platelet-derived growth factor gene, which affects bone growth and may influence differences in body size between wolf populations. This study demonstrates the power of population genomics for identifying genetic signals of demographic bottlenecks and detecting signatures of directional selection in bottlenecked populations, despite their low background variability.