BACKGROUND: Understanding how and why genetic variation is partitioned across geographic space is of fundamental importance to understanding the nature of biological species. How geographical isolation and local adaptation contribute to the formation of ecotypically differentiated groups of plants is just beginning to be understood through population genomic studies. We used whole genome sequencing combined with association study of climate to discover the drivers of differentiation in the perennial C4 grass Panicum hallii. RESULTS: Sequencing of 89 natural accessions of P.hallii revealed complex population structure across the species range. Major population genomic separation was found between subspecies P.hallii var. hallii and var. filipes as well as between at least four major unrecognized subgroups within var. hallii. At least 139 genomic SNPs were significantly associated with temperature or precipitation across the range and these SNPs were enriched for non-synonymous substitutions. SNPs associated with temperature and aridity were more often found in or near genes than expected by chance and enriched for putative involvement in dormancy processes, seed maturation, response to hyperosmosis and salinity, abscisic acid metabolism, hormone metabolism, and drought recovery. CONCLUSIONS: Both geography and climate adaptation contribute significantly to patterns of genome-wide variation in P.hallii. Population subgroups within P.hallii may represent early stages in the formation of ecotypes. Climate associated loci identified here represent promising targets for future research in this and other perennial grasses.