Abstract Background Breeds with small population size are in danger of an increased inbreeding rate and loss of genetic diversity, which puts them at risk for extinction. In Sweden there are a number of local breeds, native breeds which have adapted to specific areas in Sweden, for which efforts are being made to keep them pure and healthy over time. One example of such a breed is the Swedish Gute sheep. The objective of this study was to estimate inbreeding and genetic diversity of Swedish Gute sheep. Results Three datasets were analysed: pedigree information of the whole population, pedigree information for 100 animals of the population, and microsatellite genotypes for 94 of the 100 animals. The average inbreeding coefficient for lambs born during a six year time period (2007â 2012) did not increase during that time period. The inbreeding calculated from the entire pedigree (0.038) and for a sample of the population (0.018) was very low. Sheep were more heterozygous at the microsatellite markers than expected (average multilocus heterozygosity and Ritland inbreeding estimates 1.01845 and -0.03931) and five of seven microsatellite markers were not in Hardy Weinberg equilibrium due to heterozygosity excess. The total effective population size estimated from the pedigree information was 155.4 and the average harmonic mean effective population size estimated from microsatellites was 88.3. Pedigree and microsatellite genotype estimations of inbreeding were consistent with a breeding program with the purpose of reducing inbreeding. Conclusion Our results showed that current breeding programs of the Swedish Gute sheep are consistent with efforts of keeping this breed viable and these breeding programs are an example for other small local breeds in conserving breeds for the future.