Species-specific regulation of gene expression contributes to the development and maintenance of reproductive isolation and to species differences in ecologically important traits. A better understanding of the evolutionary forces that shape regulatory variation and divergence can be developed by comparing expression differences among species and interspecific hybrids. Once expression differences are identified, the underlying genetics of regulatory variation or divergence can be explored. With the goal of associating cis and/or trans components of regulatory divergence with differences in gene expression, overall and allele-specific expression levels were assayed genomewide in female adult heads of Drosophila melanogaster, D. simulans, and their F1 hybrids. A greater proportion of cis differences than trans differences were identified for genes expressed in heads and, in accordance with previous studies, cis differences also explained a larger number of species differences in overall expression level. Regulatory divergence was found to be prevalent among genes associated with defense, olfaction, and among genes downstream of the Drosophila sex determination hierarchy. In addition, two genes, with critical roles in sex determination and micro RNA processing, Sxl and loqs, were identified as misexpressed in hybrid female heads, potentially contributing to hybrid incompatibility.