cis-Regulatory element evolution is a key mechanism of biological diversification. Surprisingly little is known, however, about patterns of gene regulatory evolution across a range of divergence times, and the extent to which such variation drives local genomic adaptation. In chapter 1, we introduce the functional genomic methods used in this dissertation, and briefly discuss the current state and future prospects for the study of gene regulatory evolution. In chapter 2, we characterize the evolution of regulatory loci in butterflies and moths using ChIP-seq annotation of regulatory elements across three stages of Heliconius head development. In the process we provide a high quality, functionally annotated genome assembly for the butterfly Heliconius erato. Comparing cis-regulatory element conservation across six lepidopteran genomes, we find that regulatory sequences evolve at a pace similar to that of protein-coding regions. we also observe that elements active at multiple developmental stages are markedly more conserved than elements with stage-specific activity. Surprisingly, we also find that stage-specific proximal and distal regulatory elements evolve at nearly identical rates. This study provides a benchmark for genome-wide patterns of regulatory element evolution in insects, and shows that developmental timing of activity strongly predicts patterns of regulatory sequence evolution. In chapter 3, we use functional assays for chromatin accessibility and histone modifications to test the hypothesis that intraspecific genomic divergence is linked to regulatory variation between distinct populations of Heliconius butterflies. We show that population-level variability in both chromatin accessibility and regulatory activity are abundant within the Heliconius genome. We further show that differences in regulatory activity between populations do not require associated differences in chromatin accessibility, illustrating that different modes of regulatory variation can be evolutionarily decoupled. Importantly, patterns of regulatory variation depart from neutral expectations, suggesting that selection underlies much of the observed regulatory divergence. Supporting this, genomic regions with high Fst are highly enriched for variable regulatory elements, and half of all differentially expressed genes have variable promoter-associated regulatory elements. Our work shows that regulatory elements vary between populations at different functional levels, and that selection on variable elements is a major force underlying genomic divergence within species.