In Chinquihue Bay, a sheltered locality in Southern Chile, female Crepidula dilatata Lamarck brood egg masses which differ in intracapsular development. In some, all eggs develop and are hatched as free veliger larvae (indirect development). In others, only some of the eggs develop and hatch as young adults (direct development), the rest being consumed as nurse eggs. Two possible interpretations are considered: intrapopulation variation of developmental pattern in a species, and the coexistence of two sibling species. Stages of the intracapsular development are described and illustrated. Fecundity varies according to size of the female. For females brooding eggs with indirect development it is estimated at between 3840 and 85575 embryos per spawn; for females with eggs undergoing direct development, embryo production per egg mass is estimated at between 70 and 812. A comparison is made between females brooding the two kinds of egg masses. Minor differences exist in adult coloration, shape of egg capsules, egg diameters, spawning season and their abundance and distribution in the intertidal. Brooding females with eggs displaying indirect development are significantly larger than those with eggs of direct development. The latter females form chains subtidally but not intertidally as do females bearing eggs with indirect development. On these females with pelagic larvae, chains frequently include sedentary males which reach large sizes. On basal females with direct development, chains contain mostly other females, suggesting that matings are temporary and by errant males. These results are compared with existing information in the literature for other species both in this genus and in other marine invertebrates. It is concluded that two sympatric sibling species with different modes of development are present in the morphospecies C. dilatata Lamarck in Southern Chile.