Environmental signals can induce phenotypic changes that span multiple generations. Along with phenotypic responses that occur during development (i.e., ‘within-generation’ plasticity), such ‘transgenerational plasticity’ (TGP) has been documented in a diverse array of taxa spanning many environmental perturbations. New theory predicts that temporal stability is a key driver of the evolution of TGP. We tested this prediction using natural populations of zooplankton from lakes in Connecticut that span a large gradient in the temporal dynamics of predator-induced mortality. We reared >120 clones of Daphnia ambigua from 9 lakes for multiple generations in the presence/absence of predator cues. We found that temporal variation in mortality selects for within-generation plasticity while consistently strong (or weak) mortality selects for increased transgenerational plasticity. Such results provide the first evidence for local adaptation in TGP and argue that divergent ecological conditions select for phenotypic responses within and across generations.