Transposable element activity is thought to be responsible for a large portion of all mutations, but its influence on the evolution of populations has not been well studied. Using mutation accumulation experiments with the nematode Caenorhabditis elegans, we investigated the impact of transposable element activity on the production of mutational variances and covariances. The experiments involved the use of two mutator strains (RNAi-deficient mutants) that are characterized by high levels of germline transposition, as well as the Bristol N2 strain, which lacks germline transposition. We found that transposition led to an increase in mutational heritabilities, as well as to the intensification of correlation patterns observed in the absence of transposition. No mutational trade-offs were detected and mutations generally had a deleterious effect on components of fitness. We also tested whether the pattern of mutational covariation could be used to predict observed patterns of population divergence in this species. Using 15 natural populations, we found that population divergence of C. elegans in multivariate phenotypic space occurred in directions only partially concordant with mutation, and thus other evolutionary factors, such as natural selection and genetic drift, must be acting to produce divergence within this species. Our results suggest that mutations induced by mobile elements in C. elegans are similar to other spontaneous mutations with respect to their contribution to the microevolution of quantitative traits.