Differences in gene expression are central to evolution. Such differences can arise from cis-regulatory changes that affect transcription initiation, transcription rate and/or transcript stability in an allele-specific manner, or from trans-regulatory changes that modify the activity or expression of factors that interact with cis-regulatory sequences. Both cis- and trans-regulatory changes contribute to divergent gene expression, but their respective contributions remain largely unknown. Here we examine the distribution of cis- and trans-regulatory changes underlying expression differences between closely related Drosophila species, D. melanogaster and D. simulans, and show functional cis-regulatory differences by comparing the relative abundance of species-specific transcripts in F1 hybrids. Differences in trans-regulatory activity were inferred by comparing the ratio of allelic expression in hybrids with the ratio of gene expression between species. Of 29 genes with interspecific expression differences, 28 had differences in cis-regulation, and these changes were sufficient to explain expression divergence for about half of the genes. Trans-regulatory differences affected 55% (16 of 29) of genes, and were always accompanied by cis-regulatory changes. These data indicate that interspecific expression differences are not caused by select trans-regulatory changes with widespread effects, but rather by many cis-acting changes spread throughout the genome.