In many invertebrates, body size shows genetically based clines, with size increasing in colder climates. Large body size is typically associated with prolonged development times. We consider variation in the CNS-specific gene neurofibromin 1 (Nf1) and its association with body size and development time. We identified two major Nf1 haplotypes in natural populations, Nf1-insertion-A and Nf1-deletion-G. These haplotypes are characterized by a 45-base insertion/deletion (INDEL) in Nf1 intron 2 and an A/G synonymous substitution (locus L17277). Linkage disequilibrium (LD) between the INDEL and adjacent sites is high but appears to be restricted within the Nf1 gene interval. In Australia, the frequency of the Nf1-insertion-A haplotype increases with latitude where wing size is larger, independent of the chromosomal inversion In(3R)Payne. Unexpectedly, the Nf1-insertion-A haplotype is negatively associated with wing size. We found that the Nf1-insertion-A haplotype is enriched in females with shorter development time. This suggests that the Nf1 haplotype cline may be driven by selection for development time rather than size; females from southern (higher latitude) D. melanogaster populations maintain a rapid development time despite being relatively larger, and the higher incidence of Nf1-insertion-A in Southern Australia may contribute to this pattern, whereas the effects of the Nf1 haplotypes on size may be countered by other loci with antagonistic effects on size and development time. Our results point to the potential complexity involved in identifying selection on genetic variants exhibiting pleiotropic effects when studies are based on spatial patterns or association studies.