Gene conversion, the unidirectional exchange of genetic material between homologous sequences, is thought to strongly influence patterns of genetic diversity. The high diversity of major histocompatibility complex (MHC) genes in many species is thought to reflect a long history of gene conversion events both within and among loci. Theoretical work suggests that intra- and interlocus gene conversion leave characteristic signatures of nucleotide diversity, but empirical studies of MHC variation have rarely been able to analyze the effects of conversion events in isolation, due to the presence of multiple gene copies in most species. The potbellied seahorse (Hippocampus abdominalis), a species with a single copy of the MH class II beta-chain gene (MHIIb), provides an ideal system in which to explore predictions on the effects of intralocus gene conversion on patterns of genetic diversity. The genetic diversity of the MHIIb peptide binding region (PBR) is high in the seahorse, similar to other vertebrate species. In contrast, the remainder of the gene shows a total absence of synonymous variation and low levels of intronic sequence diversity, concentrated in 3 short repetitive regions and 1-12 SNPs per intron. The distribution of substitutions across the gene results in a patchwork pattern of shared polymorphism between otherwise divergent sequences. The pattern of nucleotide diversity observed in the seahorse MHIIb gene is congruent with theoretical expectations for intralocus gene conversion, indicating that this evolutionary mechanism has played an important role in MHC gene evolution, contributing to both the high diversity in the PBR and the low diversity outside this region. Neutral variation at this locus may be further reduced due to biases in nucleotide composition and functional constraints.