Niche expansion can lead to adaptive differentiation and speciation, but there are few examples from contemporary niche expansions about how this process is initiated. We assess the consequences of a niche expansion by Mexican jays (Aphelocoma ultramarina) along an elevation gradient. We predicted that jays at high elevation would have straighter bills adapted to feeding on pine cones, whereas jays at low elevation would have hooked bills adapted to feeding on acorns. We measured morphological and genetic variation of 95 adult jays and found significant differences in hook length between elevations in accordance with predictions, a pattern corroborated by analysis at the regional scale. Genetic results from microsatellite and mtDNA variation support phenotypic differentiation in the presence of gene flow coupled with weak, but detectable genetic differentiation between high- and low-elevation populations. These results demonstrate that niche expansion can lead to adaptive divergence despite gene flow between parapatric populations along an elevation gradient, providing information on a key precursor to ecological speciation.