Recent taxonomic and population genetic studies have revealed the presence of substantial cryptic diversity through sequence analysis of nematode morphospecies classified in different major clades. Correct interpretations of intra- and interspecific genetic variation require certainty about the conspecificity of the sequenced specimens, which in turn must depend on appropriate protocols with built-in verifiability procedures. In this study, we performed a population genetic study in the free-living marine nematode Thoracostoma trachygaster, a member of one of the earliest major clades to diverge in nematode phylogeny. We collected 367 nematodes from 11 populations located in the Californian Bight, all of which were video captured before DNA extraction to document and verify their individual morphology. Sequences for the cytochrome c oxidase subunit 1 (COI), D2D3 and 18S genes showed eight deeply divergent clades, and using a reverse taxonomy approach, six of these clades proved to be other morphospecies than T. trachygaster. Phylogenetic analyses of COI, internal transcribed spacer and D2D3 showed evidence for two sympatrically distributed cryptic species within the morphospecies T. trachygaster. Population genetic analyses of the most widespread cryptic species showed a moderate genetic structuring (Theta(ST) = 0.28), and 18% of this genetic variation was caused by differences between populations north and south of Point Conception. Within the southern Californian Bight, some genetic differentiation could be attributed to differences between populations north and south of Malibu, supporting the idea of a barrier to gene flow near Los Angeles region. The results for T. trachygaster support the contention that species diversity within free-living nematodes is underestimated, and that dispersal of marine nematodes from tidal environments associated with kelp holdfasts is substantial at scales of a few 100 km.