The first zoea of Lauridromia indica (Gray, 1831) is described and compared with other dromiid larvae. Forty-six characters of dromiid first zoea and megalopa larvae (seven genera and 11 species) are summarized, and their concordance with the taxonomy of recently revised genera, based on adult morphology, is tested. For the most part, larval characters support the new generic arrangement of McLay (1993). However, the larvae of Dromia wilsoni are very different from those of congeners, suggesting that it should be placed in a new genus. Almost half of the species whose larvae are known show various degrees of abbreviated development. All known dromiids with direct development occur in Australian waters. This mode of development is not confined to a monophyletic group of dromiids and seems to have evolved independently several times. The distinctiveness of the shell-carrying genera Conchoecetes and Hypoconcha is reinforced by larval characters and their similarity suggests descent from a common ancestor. On the basis of larval and adult characters, these two genera should eventually be placed in a separate new family.