The genetic basis for divergence in developmental gene expression among species is poorly understood, despite growing evidence that such changes underlie many interesting traits. Here we quantify transcription in hybrids of Heliocidaris tuberculata and Heliocidaris erythrogramma, two closely related sea urchins with highly divergent developmental gene expression and life histories. We find that most expression differences between species result from genetic influences that affect one stage of development, indicating limited pleiotropic consequences for most mutations that contribute to divergence in gene expression. Activation of zygotic transcription is broadly delayed in H. erythrogramma, the species with the derived life history, despite its overall faster premetamorphic development. Altered expression of several terminal differentiation genes associated with the derived larval morphology of H. erythrogramma is based largely on differences in the expression or function of their upstream regulators, providing insights into the genetic basis for the evolution of key life history traits.