Natural selection not only affects the actual loci under selection but also leaves “footprints” in patterns of genetic variation in linked genetic regions. This offers exciting opportunities for inferring selection and for understanding the processes shaping levels of genetic variation in natural populations. Here, we develop analytical approximations based on coalescent theory to characterize the genetic footprint of a complex, but potentially common type of natural selection: balancing selection with seasonally fluctuating allele frequencies. As we show analytically and confirm with stochastic simulations, seasonal allele frequency fluctuations can have important (and partly unexpected) consequences for the genetic footprint of balancing selection. Fluctuating balancing selection generally leads to an increase in genetic diversity close to the selected site, the effect of balancing selection, but reduces diversity further away from the selected site, which is a consequence of the allele-frequency fluctuations effectively producing recurrent bottlenecks of allelic backgrounds. This medium- and long-range reduction usually outweighs the short-range increase when averaging diversity levels across the entire chromosome. Strong fluctuating balancing selection even induces a loss of genetic variation in unlinked regions, e.g. on different chromosomes. If many loci in the genome are simultaneously under fluctuating balancing selection this can lead to substantial genome-wide reductions in genetic diversity, even when allele-frequency fluctuations are small and local footprints are difficult to detect. Thus, together with genetic drift, selective sweeps and background selection, fluctuating selection could be a major force shaping levels of genetic diversity in natural populations.