Rare cases of ring species, or circular overlaps, offer excellent opportunities to study speciation in sympatry because they can reveal how clinal variation across interbreeding populations may lead to reproductive isolation. In a decade long study across south eastern Australia we measured phenotypic traits among multiple populations, particularly focusing on breeding pairs in two intermediate, clinally varying populations, in order to evaluate the contribution of assortative mating to population divergence. Highly variable yellow-red plumage coloration, produced by psittacofulvin pigments unique to parrots, has hitherto been the only trait used to define populations, but we found no assortative mating for such pigmentary colours. We did find that pigmentation was strongly associated with climate, and was discordant with microsatellite variation, indicating a role for selection in maintaining diversity. By contrast, the ultraviolet-blue coloration based on feather nanostructure, was sexually dimorphic and showed assortative mating. Our findings suggest that structural coloration provides more important sexual signals than pigmentary coloration in this parrot, and perhaps in parrots in general. Our work also suggests how the lack of condition dependence in parrots’ pigmentary coloration may have contributed to the ‘popularity’ of parrots as pets, and thereby the high proportion of threatened species worldwide. The possible role of other factors such as disease (beak and feather disease virus), and subspecies differences in spectral tuning, in maintaining variability in this species complex is also discussed. Overall, our long term study reveals how feather structure, climate, disease, population history, natural selection and sexual selection may interact to maintain diversity in this highly variable species, despite the presence of gene flow throughout the ‘ring’.