High genetic diversity is often a good predictor of long-term population viability, yet some species persevere despite having low genetic diversity. Here we study the genomic erosion of the Seychelles paradise flycatcher (Terpsiphone corvina), a species that narrowly avoided extinction after having declined to 28 individuals in the 1960s. The species recovered unassisted to over 250 individuals in the 1990s and was downlisted from Critically Endangered to Vulnerable in the IUCN Red List in 2020. By comparing historical, pre-bottleneck (130+ years old) and modern genomes, we uncovered a 10-fold loss of genetic diversity. The genome shows signs of historical inbreeding during the bottleneck in the 1960s, but low levels of recent inbreeding after the demographic recovery. We show that the proportion of severely deleterious mutations has reduced in modern individuals, but mildly deleterious mutations have remained unchanged. Computer simulations suggest that the Seychelles paradise flycatcher avoided extinction and recovered due to its long-term small Ne. This reduced the masked load and made the species more resilient to inbreeding. However, we also show that the chronically small Ne and the severe bottleneck resulted in very low genetic diversity in the modern population. Our simulations show this is likely to reduce the species’ adaptive potential when faced with environmental change, thereby compromising its long-term population viability. In light of rapid global rates of population decline, our work highlights the importance of considering genomic erosion and computer modelling in conservation assessments