Transposable element (TE) activity has emerged as a major cause of variation in genome size and structure among species. To what extent TEs contribute to genetic variation and divergence within species, however, is much less clear, mainly because population genomic data have so far only been available for the classical model organisms. In this study, we use the annual Mediterranean grass Brachypodium distachyon to investigate TE dynamics in natural populations. Using whole-genome sequencing data for 53 natural accessions, we identified more than 5,400 TE polymorphisms across the studied genomes. We found, first, that while population bottlenecks and expansions have shaped genetic diversity in B. distachyon, these events did not lead to lineage-specific activations of TE families, as observed in other species. Instead, the same families have been active across the species range and TE activity is homogeneous across populations, indicating the presence of conserved regulatory mechanisms. Second, almost half of the TE insertion polymorphisms are accession-specific, most likely because of recent activity in expanding populations and the action of purifying selection. And finally, although TE insertion polymorphisms are underrepresented in and around genes, more than 1,000 of them occur in genic regions and could thus contribute to functional divergence. Our study shows that while TEs in B. distachyon are “well-behaved” compared with TEs in other species with larger genomes, they are an abundant source of lineage-specific genetic variation and may play an important role in population divergence and adaptation.