The Waler horse breed is an integral part of Australian history. The purposes of this study were to analyse the genetic variability in Waler horses from Australia and to investigate genetic relationships with other horse breeds. We examined the genetic diversity of 70 Waler horses sampled from seven breeding stations in Australia. Also we analysed the relationships of these horses with 11 other horse breeds. Analysis of the genetic structure was carried out using 15 microsatellite loci, genetic distances, AMOVA, factorial correspondence analysis and a Bayesian method. We found that the genetic diversity in the Waler was greater than the domestic horse mean and exceeded that of all endangered horse breeds. Our findings also revealed moderate population subdivision rather than inbreeding. All genetic similarity measures indicated that the Thoroughbred might be a key ancestor to the Waler. This study indicates that there is no immediate concern for loss of variation in Waler horses. Also, there clearly has been a strong input from the Thoroughbred into the Waler horse breed. However, the genetic evidence suggests that this input was not just direct but also came through other types of horses with a Thoroughbred cross background.