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Historical, archaeological and linguistic sources suggest that the ancestors of the present day population in the Faroe Islands may have their origin in several different regions surrounding the North Atlantic Ocean. In this study we use binary and microsatellite markers of the Y chromosome to analyse genetic diversity in the Faroese population and to compare this with the distribution of genotypes in the putative ancestral populations. Using a combination of genetic distance measures, assignment and phylogenetic analyses, we find a high degree of similarity between the Faroese Y chromosomes and the Norwegian, Swedish and Icelandic Y chromosomes but also some similarity with the Scottish and Irish Y chromosomes. Diversity measures and estimates of effective population sizes also suggest that the original gene pool of the settlers have been influenced by random genetic drift, thus complicating direct comparisons with other populations. No extensive immigration from Iceland to the Faroe Islands can be documented in the historical record. We therefore hypothesise that the high degree of Y chromosome similarity between the two populations arose because they were colonised at approximately the same time by males originating from the same regions of Scandinavia and, to a lesser extent, from the British Isles.