This theory concerns the means by which animals generate phenotypic variation from genetic change. Most anatomical and physiological traits that have evolved since the Cambrian are, we propose, the result of regulatory changes in the usage of various members of a large set of conserved core components that function in development and physiology. Genetic change of the DNA sequences for regulatory elements of DNA, RNAs, and proteins leads to heritable regulatory change, which specifies new combinations of core components, operating in new amounts and states at new times and places in the animal. These new configurations of components comprise new traits. The number and kinds of regulatory changes needed for viable phenotypic variation are determined by the properties of the developmental and physiological processes in which core components serve, in particular by the processes' modularity, robustness, adaptability, capacity to engage in weak regulatory linkage, and exploratory behavior. These properties reduce the number of regulatory changes needed to generate viable selectable phenotypic variation, increase the variety of regulatory targets, reduce the lethality of genetic change, and increase the amount of genetic variation retained by a population. By such reductions and increases, the conserved core processes facilitate the generation of phenotypic variation, which selection thereafter converts to evolutionary and genetic change in the population. Thus, we call it a theory of facilitated phenotypic variation.