As noted in previous chapters of this volume, the interplay between genes and environment during development has generated a stunning array of phenotypes across the tree of life. The ability of an individual organism (or genotype) to produce alternative phenotypes depending on the environment (phenotypic plasticity) lies at the heart of this interplay. Indeed, the notion that environmentally induced, or plastic, traits can contribute to large-scale patterns of diversity dates back over a century. According to this scenario––dubbed ‘plasticity-led evolution’––developmental variation in how individuals respond to a change in the environment generates phenotypic variation upon which selection can act to promote the evolution of new traits and/or greater diversity within or among species. Despite growing consensus around certain aspects of this process, there are important controversies and challenges that need to be resolved before we can more completely understand how plasticity might lead and facilitate evolutionary innovation and diversification.