One approach to understanding the process of speciation is to characterize the genetic architecture of post-zygotic isolation. As gene regulation requires interactions between loci, negative epistatic interactions between divergent regulatory elements might underlie hybrid incompatibilities and contribute to reproductive isolation. Here, we take advantage of a cross between house mouse subspecies, where hybrid dysfunction is largely unidirectional, to test several key predictions about regulatory divergence and reproductive isolation. Regulatory divergence between Mus musculus musculus and M. m. domesticus was characterized by studying allele-specific expression in fertile hybrid males using mRNA-sequencing of whole testes. We found extensive regulatory divergence between M. m. musculus and M. m. domesticus, largely attributable to cis-regulatory changes. When both cis and trans changes occurred, they were observed in opposition much more often than expected under a neutral model, providing strong evidence of widespread compensatory evolution. We also found evidence for lineage-specific positive selection on a subset of genes related to transcriptional regulation. Comparisons of fertile and sterile hybrid males identified a set of genes that were uniquely misexpressed in sterile individuals. Lastly, we discovered a nonrandom association between these genes and genes showing evidence of compensatory evolution, consistent with the idea that regulatory interactions might contribute to Dobzhansky-Muller incompatibilities and be important in speciation.