The negative co-variation of life-history traits such as fecundity and lifespan across species suggests the existence of ubiquitous trade-offs. Mechanistically, trade-offs result from the need to differentially allocate limited resources to traits like reproduction versus self-maintenance, with selection favoring the evolution of optimal allocation mechanism. Here I discuss the physiological (endocrine) mechanisms that underlie optimal allocation rules and how such rules evolve. The hormone testosterone may mediate life-history trade-offs due to its pleiotropic actions in male vertebrates. Conservation in the actions of testosterone in vertebrates has prompted the ‘evolutionary constraint hypothesis,’ which assumes that testosterone signaling mechanisms and male traits evolve as a unit. This hypothesis implies that the actions of testosterone are similar across sexes and species, and only the levels of circulating testosterone concentrations change during evolution. In contrast, the ‘evolutionary potential hypothesis’ proposes that testosterone signaling mechanisms and male traits evolve independently. In the latter scenario, the linkage between hormone and traits itself can be shaped by selection, leading to variation in trade-off functions. I will review recent case studies supporting the evolutionary potential hypothesis and suggest micro-evolutionary experiments to unravel the mechanistic basis of life-history evolution. BioEssays 29: 133–144, 2007. © 2007 Wiley Periodicals, Inc.