When gene regulatory networks diverge between species, their dysfunctional expression in inter-species hybrid individuals can create genetic incompatibilities that underlie the developmental defects responsible for intrinsic post-zygotic reproductive isolation. Divergence in cis- and trans-acting regulatory controls evolve despite stabilizing selection on gene expression, being hastened by directional selection with adaptation, sexual selection, and inter-sexual conflict. Dysfunctional sex-biased gene expression, in particular, may provide an important source of genetic incompatibilities, with more severe misregulation expected for the heterogametic sex. Here, we characterize and compare male and female transcriptome profiles for sibling species of Caenorhabditis nematodes, C. briggsae and C. nigoni, and allele-specific expression in their F1 hybrids to deconvolve features of expression divergence and regulatory dysfunction. Despite evidence of widespread stabilizing selection on gene expression, we find broad misregulation of sex-biased genes in F1 hybrids that is most pronounced for the X-chromosome, supporting a “large-X” effect, and that counters expectations by disproportionately affecting hybrid females. Hybrid male misexpression, however, is greater in magnitude, with spermatogenesis genes especially prone to high divergence in both expression and coding sequences that may explain elevated sterility of hybrid males, consistent with “faster male” and “fragile male” models for Haldane’s rule. Regulatory and coding divergence overall correlate only weakly, however, and downregulation of male-biased genes in females implicates trans-acting modifiers in the evolutionary resolution of inter-sexual conflicts. This work identifies important differences between the sexes in how regulatory networks diverge that contributes to sex-biases in how genetic incompatibilities manifest during the speciation process.Author’s summaryMany mutations that affect traits as species diverge do so by altering gene expression. Such gene regulatory changes also accumulate in the control of static traits, due to compensatory effects of mutation on multiple regulatory elements. Theory predicts many of these changes to cause inter-species hybrids to experience dysfunctional gene expression that leads to reduced fitness, disproportionately affecting the sex chromosomes and sex-biased gene expression. Our analyses of genome-wide expression data from Caenorhabditis nematode roundworms support these predictions. We find widespread rewiring of gene regulation despite extensive morphological stasis, and conserved overall expression profiles, that is a hallmark of these animals. Misregulation of expression in both sexes is most severe for genes linked to the X-chromosome, sperm genes show distinctive signatures of divergence, and differences between the sexes in regulatory evolution implicate resolved historical sexual conflicts over gene expression. This work clarifies how distinct components of regulatory networks evolve and contribute to sex differences in the manifestation of genetic incompatibilities in the speciation process.