Understanding the roles of transposable elements (TEs) in the evolution of genome and adaptation is a long-sought goal. Here, we present a new model of TE co-option, in which a TE is harnessed by an essential gene and confers local adaptation through heterozygote advantage. We characterized a human Alu-like TE family, the Lm1 elements, in the genome of the migratory locust Locusta migratoria that harbors 0.7 million copies of the elements. Scanning Lm1 insertions in the natural locust populations revealed the widespread high polymorphism of Lm1. An Lm1 was recruited into the coding region of Heat-shock protein 90 (Hsp90), an important molecular chaperone for diverse signal transduction and developmental pathways. Only heterozygotes of the allele are present in natural populations. Allele frequency increases with decreased latitudes in east coastal China, even increasing up to 76% in southern populations. Regions flanking the Lm1 insertion display clear signatures of a selective sweep linked to Lm1. The Lm1-mediated Hsp90 mutation is consequential for the embryonic development of locust. Heterozygous embryos develop faster than the wild type, particularly when cued by long-day parental photoperiod. The heterozygotes also present a reduced within-population variation in embryonic development, i.e., high developmental synchrony of embryos. The naturally occurring Hsp90 mutation could facilitate multivoltinism and developmental synchronization of the locust in southern tropical region. These results revealed a genetic mechanism behind microevolutionary changes in which balancing selection may have acted to maintain the heterozygote advantage through TE co-option in essential genes.