As global warming progresses, reef-building corals could avoid local population declines through “genetic rescue” involving exchange of heat-tolerant genotypes across latitudes, but only if latitudinal variation in thermal tolerance is heritable. Here we show up to ten-fold increase in survival of the coral larvae under heat stress when their parents come from a lower latitude warmer location. Larval heat tolerance was associated with heritable differences in expression of oxidative, extracellular, transport and mitochondrial functions that signified the lack of baseline stress. Finally, several genomic regions strongly responded to selection for heat tolerance in inter-latitudinal reciprocal crosses. Taken together, our results demonstrate that variation in coral heat tolerance across latitudes has a strong genetic basis and could serve as raw material for natural selection.