Allopatric speciation (also known as Allopatry) is speciation by geographical isolation.
Speciation is especially likely to occur in small populations that have become separated from the main populations, e.g., on islands, or in small lakes. One famous example is Hawaiian flies. Many of the small islands have endemic fly species. Theoretically, flies migrated to the smaller islands when the islands had recently emerged by volcanic action. Separated from the main population, the small fly population diverges genetically, adapting to the new island until it is a separate species from the original parent population. This example also illustrates the founder's effect.
Darwin found similar patterns of species on the Galapagos and Canary islands. It is an example of how patterns can illuminate processes (e.g. allopatric speciation) in evolution.
The isolation can occur when:
A large lake dries out and becomes a few smaller, shallower lakes
A island is colonised, sometimes resulting in island dwarfing
A mountain range rises, splitting a habitat/population into two
A desert is created by climate change, splitting a population/habitat in two
A cave traps a species in its environment
Non-allopatric speciation is either sympatric (sharing the same territory) or parapatric (in abutting but not overlapping territories).
Reference
Evolutionary Analysis (2nd Edition). Scott Freeman and Jon C. Herron, p412-413. ISBN 0131502956
Allopatric speciation, also known as geographic speciation, occurs when populations physically isolated by an extrinsic barrier evolve intrinsic (genetic) reproductive isolation such that if the barrier between the populations breaks down, individuals of the two populations can no longer interbreed.
Ernst Mayr, an evolutionary biologist and famous proponent of allopatric speciation, hypothesized that adaptive genetic changes that accumulate between allopatric populations cause negative epistasis in hybrids, resulting in sterility or inviability.
Allopatric speciation may occur when a species is subdivided into two large populations (vicariant or dichopatric speciation) or when a small number of individuals colonize a novel habitat on the periphery of a species' geographic range (peripatric speciation).
There are four modes of natural speciation, based on the extent to which speciating populations are geographically isolated from one another: allopatric, peripatric, parapatric, and sympatric.
During allopatric speciation, a population splits into two geographically isolated allopatric populations (for example, by habitat fragmentation due to geographical change such as mountain building or social change such as emigration).
Island genetics, the tendency of small, isolated genetic pools to produce unusual traits, has been observed in many circumstances, including insular dwarfism and the radical changes among certain famous island chains, like Komodo and Galapagos, the latter having given rise to the modern expression of evolutionary theory, after being observed by Charles Darwin.