The model of ecological speciation implies that habitat differences may split a species by strong selection and rapid adaptation even under sympatric conditions. Recent studies on the polychaete Scoloplos armiger in the Wadden Sea, North Sea, indicate sibling species existing in sympatry: the intertidal 'Type I' with holobenthic development out of egg cocoons and the subtidal 'Type S' shedding pelagic larvae into the open water. In the current study, Type I and S are compared in habitat-related traits of reproductive timing and physiological response to hypoxia and sulphide. Spawnings of Type I and Type S recorded over six years overlap in spring and both appear to be triggered by rise in sea temperature above 5°C. Type S exhibits an additional autumn spawning (at water temperatures around 10 °C) which was unknown till now and is absent in Type I. High overall abundances of pelagic larvae in the Wadden Sea are shown. Since the pelagic dispersal mode has been neglected so far, reassessment of S. armiger population dynamics models is suggested. Tolerance against sulphide and hypoxia were both lower in Type S than in Type I. This correlates with a measured 5 to 10-fold lower sulphide concentration in the subtidal compared to the intertidal habitat. Physiological tolerance and divergence in developmental mode appear as traits which may have ultimately led to reproductive isolation between Type I and Type S. Their role in allopatric and sympatric speciation scenarios in S. armiger is discussed.