Species and populations with parallel evolution of specific traits can help illuminate how predictable adaptations and divergence are at the molecular and developmental level. Following the last glacial period, dwarfism and specialized bottom feeding morphology evolved rapidly in several landlocked Arctic charr Salvelinus alpinus populations in Iceland. To study the genetic divergence between small benthic morphs and limnetic morphs, we conducted RNA-sequencing charr embryos at four stages in early development. We studied two stocks with contrasting morphologies: the small benthic (SB) charr from Lake Thingvallavatn and Holar aquaculture (AC) charr. The data reveal significant differences in expression of several biological pathways during charr development. There was also an expression difference between SB- and AC-charr in genes involved in energy metabolism and blood coagulation genes. We confirmed differing expression of five genes in whole embryos with qPCR, including lysozyme and natterin-like which was previously identified as a fish-toxin of a lectin family that may be a putative immunopeptide.We also verified differential expression of 7 genes in the developing head that associated consistently with benthic v.s.limnetic morphology (studied in 4 morphs). Comparison of single nucleotide polymorphism (SNP) frequencies reveals extensive genetic differentiation between the SB and AC-charr (~1300 with more than 50% frequency difference). Curiously, three derived alleles in the otherwise conserved 12s and 16s mitochondrial ribosomal RNA genes are found in benthic charr. The data implicate multiple genes and molecular pathways in divergence of small benthic charr and/or the response of aquaculture charr to domestication. Functional, genetic and population genetic studies on more freshwater and anadromous populations are needed to confirm the specific loci and mutations relating to specific ecological traits in Arctic charr.