In times of severe environmental changes and resulting shifts in the geographical distribution of animal and plant species it is crucial to unravel the mechanisms responsible for the dynamics of species’ ranges. Without such a mechanistic understanding, reliable projections of future species distributions are difficult to derive. Species’ ranges may be highly dynamic. One particularly interesting phenomenon is range contraction following a period of expansion, referred to as ‘elastic’ behaviour. It has been proposed that this phenomenon occurs in habitat gradients, which are characterized by a negative cline in selection for dispersal from the range core towards the margin, as one may find, for example, with increasing patch isolation. Using individual‐based simulations and numerical analyses we show that Allee effects are an important determinant of range border elasticity. If only intra‐specific processes are considered, Allee effects are even a necessary condition for ranges to exhibit elastic behavior. The eco‐evolutionary interplay between dispersal evolution, Allee effects and habitat isolation leads to lower colonization probability and higher local extinction risk after range expansions, which result in an increasing amount of marginal sink patches and consequently, range contraction. We also demonstrate that the nature of the gradient is crucial for range elasticity. Gradients which do not select for lower dispersal at the margin than in the core (especially gradients in patch size, demographic stochasticity and extinction rate) do not lead to elastic range behavior. Thus, we predict that range contractions are likely to occur after periods of expansion for species living in gradients of increasing patch isolation, which suffer from Allee effects.