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Many viruses significantly impact human and animal health. Understanding the population dynamics of these viruses and their hosts can provide important insights for epidemiology and virus evolution. Puumala virus (PUUV) is a European hantavirus that may cause regional outbreaks of hemorrhagic fever with renal syndrome in humans. Here, we analyzed the spatiotemporal dynamics of PUUV circulating in local populations of its rodent reservoir host, the bank vole (Myodes glareolus) during eight years. Phylogenetic and population genetic analyses of all three genome segments of PUUV showed strong geographical structuring at a very local scale. There was a high temporal turnover of virus strains in the local bank vole populations, but several virus strains persisted through multiple years. Phylodynamic analyses showed no significant changes in the local effective population sizes of PUUV, although vole numbers and virus prevalence fluctuated widely. Microsatellite data demonstrated also a temporally persisting subdivision between local vole populations, but these groups did not correspond to the subdivision in the virus strains. We conclude that restricted transmission between vole populations and genetic drift play important roles in shaping the genetic structure and temporal dynamics of PUUV in its natural host which has several implications for zoonotic risks of the human population.