Austropandalus grayi and Pandalopsis ampla are the only members of the Pandalidae recorded from coastal waters of Argentina. The identification of planktonic larvae of A. grayi from the southwestern Atlantic and the Magellan Region was confirmed by comparing stage I zoeae with larvae hatched in the laboratory. Zoeal stages I-V and an advanced larval stage were distinguished, and their morphology and distribution are described. The phylogenetic relations of pandalid larvae and the position of A. grayi in the family are discussed.