Natural populations of Drosophila mercatorum are variable for the number of X-linked 28S ribosomal genes bearing a 5-kilobase insert. A separate polymorphic X-linked gene controls whether 28S repeats bearing the insert are preferentially underreplicated during the formation of polytene tissue. Female flies having at least a third of their 28S genes bearing the insert and lacking the ability to preferentially underreplicate inserted repeats display the abnormal abdomen syndrome. The syndrome is characterized by retention of juvenile abdominal cuticle into the adult, a slowdown in larval developmental time, and an increase in early female fecundity. The life history traits are expressed in nature and provide a basis for strong natural selection. The abnormal abdomen syndrome should be favored whenever the adult age structure is skewed towards young individuals, and field studies confirm this prediction. The closely related species, Drosophila hydei, also bears these inserts and appears to be subject to similar selection. However, D. mercatorum responds to this selection primarily through the allelic variation that controls preferential underreplication, whereas D. hydei responds primarily through adjustment of the proportion of inserted 28S genes. This is interpreted to mean that the evolution of a multigene family arises from the interaction of population-level and DNA-level processes.