We compared egg survivorship and egg development time at different soil moistures for two closely related grasshopper species from divergent habitats: marsh-inhabiting Romalea microptera (Beauvois) versus desert-inhabiting Taeniopoda eques (Burmeister). These two species can interbreed and produce viable offspring. In nature, both species have a similar 8–9 mo subterranean egg stage, but their soil environments differ dramatically in water content. We predicted that the eggs of the two species would exhibit differential survivorship and development times under different moisture levels. Our laboratory results show that the eggs of both species survived a wide range of soil moistures (≈ 0.5 to 90%), maintained for 3 mo. However, the eggs of the marsh grasshopper, R. microptera, better tolerated the highest soil moistures (95 and 100%), whereas the eggs of the desert species, T. eques, better tolerated the lowest soil moistures (0.0 and 0.1%). Sixty-five percent of marsh-inhabiting H. microptera eggs, but no desert T. eques eggs, survived 3 mo submersion under water. In contrast, 49% of desert T. eques eggs, but only 3.5% of R. microptera eggs, survived after being laid into oven-dried sand and then maintained with no additional water until hatch. In the laboratory at 26°C, the two species differed significantly in the mean length of the oviposition-to-hatch interval: 176 d for R. microptera versus 237 d for T. eques. These divergent traits presumably benefit these insects in their divergent habitats. Our results suggest the evolution of physiological divergence that is consistent with adaptations to local environments.