Despite the global economic and ecological importance of forest trees, the genomic basis of differential adaptation and speciation in tree species is still poorly understood. Populous tremula and P. tremuloides are two of the most widespread tree species in Northern Hemisphere. Using whole-genome re-sequencing data from 24 P. tremula and 22 P. tremuloides individuals, we find that the two species diverged ~2.2-3.1 million years ago. The approximately allopatric speciation of the two species was likely the results of the severing of the Bering land bridge combined with the onset of dramatic climatic oscillations throughout the Pleistocene. We detected moderate but also considerable heterogeneous genomic differentiation between species. Rather than being physically clustered into just a few large, discrete genomic “islands” as may be expected when species diverges in the presence of gene flow, we found that the regions of differentiation were particularly steep, narrowly defined and located in regions with substantially suppressed recombination. It appears that species-specific adaptation, mainly involving standing genetic variation via soft selective sweeps, was likely the predominant proximate cause in generating the differentiation islands between species and not local differences in permeability of gene flow. In addition, we identified multiple signatures of long-term balancing selection predating speciation in regions containing immunity and defense-related genes in both species.