The evolution of cellular differentiation has occurred repeatedly across the tree of life, giving rise to diversity of complex life we see today. We examine whether this repeated transition may have been facilitated by plastic responses to the environment that were later stabilized by developmental-genetic changes. We use the volvocine green algae as a model system as this clade contains undifferentiated multicellular species, species with environmentally induced somatic differentiation, species with undifferentiated cells and developmentally regulated somatic cells, and species with germ-soma division of labor. We examine a multicellular volvocine algae species, Eudorina, which has been historically characterized as undifferentiated but can develop a small proportion of plastic somatic cells following exposure to cold shock. We exposed Eudorina cultures to repeated cold shock and characterized the differentiation status of our lines more than 30 generations after the cessation of the cold treatment. Somatic differentiation evolved rapidly, with most lines showing changes in the regulation of somatic cell development and several lines evolving obligate somatic cells. The increase in the proportion of colonies that were differentiated was correlated with an increase in the number of somatic cells per differentiated colony. The repeated evolution of differentiation was shaped by the selection imposed by cold shock, as differentiated colonies were more likely to survive cold shock. Moreover, genome sequencing revealed that the regulation of multiple genes associated with the response to cold stress were altered and the cold stress pathway was likely decoupled from environmental triggers. Taken together, our results demonstrate that selection can rapidly drive the repeated transition to differentiated multicellularity via the modification of plastic responses to the environment.

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