Parasitoid wasps have evolved a wide spectrum of developmental interactions with hosts. In this review we synthesize and interpret results from the phylogenetic, ecological, physiological, and molecular literature to identify factors that have influenced the evolution of parasitoid developmental strategies. We first discuss the origins and radiation of the parasitoid lifestyle in the Hymenoptera. We then summarize how parasitoid developmental strategies are affected by ecological interactions and assess the inventory of physiological and molecular traits parasitoids use to successfully exploit hosts. Last, we discuss how certain parasitoid virulence genes have evolved and how these changes potentially affect parasitoid-host interactions. The combination of phylogenetic data with comparative and functional genomics offers new avenues for understanding the evolution of biological diversity in this group of insects.