In contrast to most widespread broad-acre crops, the narrow-leafed lupin (Lupinus angustifolius L.) was domesticated very recently, in breeding programmes isolated in both space and time. Whereas domestication was initiated in Central Europe in the early twentieth century, the crop was subsequently industrialized in Australia, which now dominates world production. To investigate the ramifications of these bottlenecks, the genetic diversity of wild (n = 1,248) and domesticated populations (n = 95) was characterized using diversity arrays technology, and adaptation studied using G × E trials (n = 31) comprising all Australian cultivars released from 1967 to 2004 (n = 23). Principal coordinates analysis demonstrates extremely limited genetic diversity in European and Australian breeding material compared to wild stocks. AMMI analysis indicates that G × E interaction is a minor, albeit significant effect, dominated by strong responses to local, Western Australian (WA) optima. Over time Australian cultivars have become increasingly responsive to warm, intermediate rainfall environments in the northern WA grainbelt, but much less so to cool vegetative phase eastern environments, which have considerably more yield potential. G × E interaction is well explained by phenology, and its interaction with seasonal climate, as a result of varying vernalization responses. Yield differences are minimized when vegetative phase temperatures fully satisfy the vernalization requirement (typical of eastern Australia), and maximized when they do not (typical of WA). In breeding for WA optima, the vernalization response has been eliminated and there has been strong selection for terminal drought avoidance through early phenology, which limits yield potential in longer season eastern environments. Conversely, vernalization-responsive cultivars are more yield-responsive in the east, where low temperatures moderately extend the vegetative phase. The confounding of phenology and vernalization response limits adaptation in narrow-leafed lupin, isolates breeding programmes, and should be eliminated by widening the flowering time range in a vernalization-unresponsive background. Concomitantly, breeding strategies that will widen the genetic base of the breeding pool in an ongoing manner should be initiated.