Diapause-destined embryos of the crustacean Artemia franciscana cease development as gastrulae, encyst, and enter a resting stage characterized by greatly reduced metabolic activity and extreme stress resistance. To better understand diapause induction and maintenance in Artemia embryos gene expression was analyzed by subtractive hybridization at two days post-fertilization, a time early in this developmental process. Eighty-five of 264 cDNA clones sequenced matched GenBank entries and they fell into categories designated as environmental information processing, cellular processes, genetic information processing and metabolism. Semi-quantitative RT-PCR of cDNAs populating the subtractive library identified seventeen up-regulated and four down-regulated transcripts, the former including those encoding a human transcription cofactor homologue, three small heat shock proteins, putative cell growth suppressor proteins and several enzymes. As examples, p8 may modulate gene expression during diapause in Artemia embryos. BRCA1 associated protein-1 (BAP1) and other functionally related proteins may influence cell growth and division during transition into diapause, a time when these processes are inhibited, whereas small heat shock proteins protect embryos from stress. This study represents the first systematic molecular characterization of diapause in crustaceans. Several differentially expressed genes were identified, expanding the repertoire of proteins potentially modified during diapause and suggesting mechanistic pathways indigenous to the initiation and maintenance of this physiological state.