The geographic and phylogenetic scale of ecologically relevant microbial diversity is still poorly understood. Using a model mutualism, fungus-growing ants and their defensive bacterial associate Pseudonocardia, we analyzed genetic diversity and biosynthetic potential in 46 strains isolated from ant colonies in a 20km transect near Barro Colorado Island in Panama. Despite an average pairwise core genome similarity of greater than 99%, population genomic analysis revealed several distinct bacterial populations matching ant host geographic distribution. We identified both genetic diversity signatures and divergent genes distinct to each lineage. We also identify natural product biosynthesis clusters specific to isolation locations. These geographic patterns were observable despite the populations living in close proximity to each other and provides evidence of ongoing genetic exchange. Our results add to the growing body of literature suggesting that variation in traits of interest can be found at extremely fine phylogenetic scales.