Dispersal and dormancy are two strategies that allow recolonization of empty patches and escape from kin competition. Because they presumably respond to similar evolutionary forces, it is tempting to consider that these strategies may substitute for each other. Yet in order to predict the outcome of the evolution of dispersal and dormancy, and to characterize the emerging covariation between both traits, it is necessary to consider models where dispersal and dormancy evolve jointly. Here, we analyze the evolution of dispersal and dormancy as a function of direct fitness costs, environmental variation, and competition among relatives. We consider two scenarios depending on whether the rates of dormancy for philopatric and dispersed individuals are constrained to be the same (unconditional dormancy) or allowed to be different (conditional dormancy). We show that only philopatric individuals should enter dormancy, at a rate increasing with increasing rates of local extinction and decreasing population sizes. When dormancy and dispersal evolve jointly, we observe a wide range of evolutionary outcomes. In particular, we find that the pattern of covariation between the evolutionarily stable rates of dispersal and dormancy is molded by the rate of extinction and the local population size.