Gene expression levels are thought to diverge primarily via regulatory mutations in trans within species, and in cis between species. To test this hypothesis in mammals we used RNA-sequencing to measure gene expression divergence between C57BL/6J and CAST/EiJ mouse strains and allele-specific expression in their F1 progeny. We identified 535 genes with parent-of-origin specific expression patterns, although few of these showed full allelic silencing. This suggests that the number of imprinted genes in a typical mouse somatic tissue is relatively small. In the set of nonimprinted genes, 32% showed evidence of divergent expression between the two strains. Of these, 2% could be attributed purely to variants acting in trans, while 43% were attributable only to variants acting in cis. The genes with expression divergence driven by changes in trans showed significantly higher sequence constraint than genes where the divergence was explained by variants acting in cis. The remaining genes with divergent patterns of expression (55%) were regulated by a combination of variants acting in cis and variants acting in trans. Intriguingly, the changes in expression induced by the cis and trans variants were in opposite directions more frequently than expected by chance, implying that compensatory regulation to stabilize gene expression levels is widespread. We propose that expression levels of genes regulated by this mechanism are fine-tuned by cis variants that arise following regulatory changes in trans, suggesting that many cis variants are not the primary targets of natural selection.