The western Himalayan yew (Taxus contorta Griffith, synonym Taxus fuana Nan Li & R.R. Mill), one of the highly prized tree species for its anticancer properties, is experiencing severe reduction in populations across its range in Pakistan. We examined a chloroplast DNA region (trnL-F) and ten nuclear microsatellite loci variations among seven populations to investigate the levels of genetic diversity and reconstruct the demographic history of T. contorta in Pakistan. A low haplotype diversity (H _T = 0.182), moderate level of microsatellite diversity (H _E = 0.541 ± 0.034), significant population differentiation (F _ST = 0.107) and high level of inbreeding (F _IS = 0.219–0.418) characterized this species. Results of an approximate Bayesian computation (ABC), mismatch distribution analysis, neutrality tests and data on glacial chronologies of the western Himalaya indicated a historic demographic expansion of T. contorta populations from small ancestral populations. This expansion is estimated to have occurred at least 37.5 thousand years ago (kya) during the late Pleistocene. An unprecedented level of habitat disturbance over the last few decades, coupled with the highly variable climate may have played an important role in shaping the genetic structure of the extant T. contorta populations. We have discussed a range of sustainable management measures for the ecological restoration of remnant populations as well as for a sustainable exploitation of this plant of high economic potential.