Sauropod dinosaurs were the largest animals ever to inhabit the land, with truly gigantic forms in at least three lineages. Small species with an adult body mass less than five tonnes are very rare, and small sauropod bones generally represent juveniles. Here we describe a new diminutive species of basal macronarian sauropod, Europasaurus holgeri gen. et sp. nov., and on the basis of bone histology we show it to have been a dwarf species. The fossils, including excellent skull material, come from Kimmeridgian marine beds of northern Germany, and record more than 11 individuals of sauropods 1.7 to 6.2 m in total body length. Morphological overlap between partial skeletons and isolated bones links all material to the same new taxon. Cortical histology of femora and tibiae indicates that size differences within the specimens are due to different ontogenetic stages, from juveniles to fully grown individuals. The little dinosaurs must have lived on one of the large islands around the Lower Saxony basin. Comparison with the long-bone histology of large-bodied sauropods suggests that the island dwarf species evolved through a decrease in growth rate from its larger ancestor.