Gene duplication is an important substrate for the evolution of new gene functions, but the impacts of gene duplicates on their own activities and on the developmental networks in which they act are poorly understood. Here, we use a natural experiment of lin-12/Notch gene duplication within the nematode genus Caenorhabditis, combined with characterization of loss- and gain-of-function mutations, to uncover functional distinctions between the duplicate genes in 1 species (Caenorhabditis briggsae) and their single-copy ortholog in Caenorhabditis elegans. First, using improved genomic sequence and gene model characterization, we confirm that the C. briggsae genome includes 2 complete lin-12 genes, whereas most other genes encoding proteins that participate in the LIN-12 signaling pathway retain a one-to-one orthology with C. elegans. We use CRISPR-mediated genome editing to introduce alleles predicted to cause gain-of-function (gf) or loss-of-function (lf) into each C. briggsae gene and find that the gf mutations uncover functional distinctions not apparent from the lf alleles. Specifically, Cbr-lin-12.1(gf), but not Cbr-lin-12.2(gf), causes developmental defects similar to those observed in Cel-lin-12(gf). In contrast to Cel-lin-12(gf), however, the Cbr-lin-12.1(gf) alleles do not cause dominant phenotypes as compared to the wild type, and the mutant phenotype is observed only when 2 gf alleles are present. Our results demonstrate that gene duplicates can exhibit differential capacities to compensate for each other and to interfere with normal development, and uncover coincident gene duplication and evolution of developmental sensitivity to LIN-12/Notch activity.