In a heterogeneous environment, natural selection on a trait can lead to a variety of outcomes, including phenotypic plasticity and bet-hedging through developmental instability. These outcomes depend on the magnitude and pattern of that heterogeneity and the spatial and temporal distribution of individuals. However, we do not know if and how those two outcomes might interact with each other. I examined the joint evolution of plasticity and instability through the use of an individual-based simulation in which each could be genetically independent or pleiotropically linked. When plasticity and instability were determined by different loci, the only effect on the evolution of plasticity was the elimination of plasticity as a bet-hedging strategy. In contrast, the effects on the evolution of instability were more substantial. If conditions were such that the population was likely to evolve to the optimal reaction norm, then instability was disfavored. Instability was favored only when the lack of a reliable environmental cue disfavored plasticity. When plasticity and instability were determined by the same loci, instability acted as a strong limitation on the evolution of plasticity. Under some conditions, selection for instability resulted in maladaptive plasticity. Therefore, before testing any models of plasticity or instability evolution, or interpreting empirical patterns, it is important to know the ecological, life history, developmental, and genetic contexts of trait phenotypic plasticity and developmental instability.