Understanding how evolutionary forces interact to drive patterns of selection and distribute genetic variation across a species’ range is of great interest in ecology and evolution, especially in an era of global change. While theory predicts how and when populations at range margins are likely to undergo local adaptation, empirical evidence testing these models remains sparse. Here, we address this knowledge gap by investigating the relationship between selection, gene flow and genetic drift in the yellowtail clownfish, Amphiprion clarkii, from the core to the northern periphery of the species range. Analyses reveal low genetic diversity at the range edge, gene flow from the core to the edge and genomic signatures of local adaptation at 56 single nucleotide polymorphisms in 25 candidate genes, most of which are significantly correlated with minimum annual sea surface temperature. Several of these candidate genes play a role in functions that are upregulated during cold stress, including protein turnover, metabolism and translation. Our results illustrate how spatially divergent selection spanning the range core to the periphery can occur despite the potential for strong genetic drift at the range edge and moderate gene flow from the core populations.