Beak morphology is an ecologically important trait for birds. Beak size and shape are crucial for adapting to new niches and for optimal utilization of existing food sources. The adaptive potential of a species can be limited by the amount of standing genetic variation and by genetic and ontogenetic constraints. Organisms of mixed ancestry, however, can be hypothesized to have a particularly high adaptive potential due to more genetic variation and the breakup of genetic constraints. Here, I take advantage of the homoploid hybrid origin of the Italian sparrow (Passer italiae), which resulted from hybridization between the Spanish sparrow (P. hispaniolensis) and the house sparrow (P. domesticus), to study aspects of local adaptation in beak morphology. I investigate how beak shape differs from that of its parent species and which factors best explain beak shape variation in this species. I found significant differences in both beak size and shape between Passer sparrow populations within and between species. I also found that local diet, as estimated from stable isotopes, is a strong predictor of beak shape variation in the Italian sparrow, suggesting that the beak of the Italian sparrow readily adapts to local conditions. Further, comparing island and mainland populations of both Italian and Spanish sparrows, I found that insularity is another important factor affecting the size and shape of the beak in a parallel fashion in both species. Finally, I investigated possible effects of species interactions by comparing diet and beak morphology of Italian sparrows living sympatrically with Spanish sparrows with nearby allopatric ones. The beak of micro-allopatric Italian sparrows did not differ in size or shape from Spanish sparrows and they had greatly overlapping diets. In contrast, in sympatry Italian sparrows had a significantly different diet and beak shape supporting the hypothesis that sympatric Italian sparrows have adapted to a different niche to escape competition from its parent species (i.e. character displacement). In conclusion, the Italian sparrow appears to have a highly adaptable beak, and beak shape variation seems to be crucial for adaptation to novel niches and environments including niche shifts induced by a closely related competitor.