Thermal tolerance is a key determinant of species distribution. Despite much study, the genetic basis of adaptive evolution of thermal tolerance, including the relative contributions of transcriptional regulation versus protein evolution, remains unclear. Populations of the intertidal copepod Tigriopus californicus are adapted to local thermal regimes across their broad geographic range. Upon thermal stress, adults from a heat tolerant southern population, San Diego (SD), upregulate several heat shock proteins (HSPs) to higher levels than those from a less tolerant northern population, Santa Cruz (SC). Suppression of a specific HSP, HSPB1, significantly reduces T. californicus survival following acute heat stress. Sequencing of HSPB1 revealed population specific nucleotide substitutions in both promoter and coding regions of the gene. HSPB1 promoters from heat tolerant populations contain two canonical heat shock elements (HSEs), the binding sites for heat shock transcription factor (HSF), whereas less tolerant populations have mutations in these conserved motifs. Allele specific expression of HSPB1 in F1 hybrids between tolerant and less tolerant populations showed significantly biased expression favoring alleles from tolerant populations and supporting the adaptive divergence in these cis-regulatory variants. The functional impact of population-specific nonsynonymous substitutions in HSPB1 coding sequences was tested by assessing the thermal stabilization properties of SD versus SC HSPB1 protein variants. Recombinant HSPB1 from the southern SD population showed greater capacity for protecting protein structure under elevated temperature. Our results indicate that both regulatory and protein coding sequence evolution within a single gene appear to contribute to thermal tolerance phenotypes and local adaptation among conspecific populations.