Yes, geographical isolation of individuals of a species lead to formation of a new species. If we consider the population of same species splitting into two separate groups and getting isolated from each other geographically by various barriers as sea, mountain, etc.
The geographical isolation of the two groups lead to their reproductive isolation due to which no genes are exchanged between them. However, breeding continues within the isolated populations producing more and more generations. Over the generations, genetic drift and natural selection is operated in the isolated group and make them more different from other.
After many years, the individuals of isolated groups will become so different that they will be incapable of reproducing with each other (if they meet again) and new species will originate evolved.