The genetic structure of three Indian sheep breeds from two different geographical locations (Nali, Chokla from north-western arid and semi-arid region; Garole from eastern saline marshy region) of India was investigated by means of 11 ovine-specific microsatellite markers as proposed in FAOs MoDAD programme. Microsatellite analysis revealed high allelic and gene diversity in all the three breeds. Nali sheep showed higher mean number of alleles and gene diversity (6.27 and 0.65) than Chokla (5.63 and 0.64) and Garole (5.63 and 0.59). High within population inbreeding estimates observed in the three breeds (FIS, Chokla = 0.286, Nali = 0.284, Garole = 0.227) reflected deficit of heterozygotes. The overall estimates for F-statistics were significantly (p < 0.05) different from zero. High values of FST (0.183) across all the loci revealed substantial degree of breed differentiation. Based on pair wise FST and Nm between different breeds, Nali and Chokla (FST = 6.62% and Nm = 4.80) were observed to be the closest followed by Garole and Nali (FST = 20.9% and Nm = 1.80), and Garole and Chokla (FST = 21.4% and Nm = 1.71). In addition, genetic distance estimates, phylogeny analysis and individual assignment test used to evaluate interbreed genetic proximity and population structure also revealed substantial genetic differentiation between Garole and the other two Rajasthani (Nali and Chokla) sheep. This divergent status of Garole sheep indicated genetic uniqueness of this breed suggesting higher priority for its conservation.