BACKGROUND Organisms live in environments that vary. For life-history traits that vary across environments, fitness will be maximised when the phenotype is appropriately matched to the environmental conditions. For the free-living nematode Caenorhabditis elegans, we have investigated how two major life-history traits, (i) the development of environmentally resistant dauer larvae and (ii) reproduction, respond to environmental stress (high population density and low food availability), and how these traits vary between lines and the genetic basis of this variation. RESULTS We found that lines of C. elegans vary in their phenotypic plasticity of dauer larva development, i.e. there is variation in the likelihood of developing into a dauer larva for the same environmental change. There was also variation in how lifetime fecundity and the rate of reproduction changed under conditions of environmental stress. These traits were related, such that lines that are highly plastic for dauer larva development also maintain a high population growth rate when stressed. We identified quantitative trait loci (QTL) on two chromosomes that control the dauer larva development and population size phenotypes. The QTLs affecting the dauer larva development and population size phenotypes on chromosome II are closely linked, but are genetically separable. This chromosome II QTL controlling dauer larva development does not encompass any loci previously identified to control dauer larva development. This chromosome II region contains many predicted 7-transmembrane receptors. Such proteins are often involved in information transduction, which is clearly relevant to the control of dauer larva development. CONCLUSIONS C. elegans alters both its larval development and adult reproductive strategy in response to environmental stress. Together the phenotypic and genotypic data suggest that these two major life-history traits are co-ordinated responses to environmental stress and that they are, at least in part, controlled by the same genomic regions.