Predators often have type II functional responses and live in environments where their life history traits as well as those of their prey vary from patch to patch. To understand how spatial heterogeneity and predator handling times influence the coevolution of patch preferences and ecological stability, we perform an ecological and evolutionary analysis of a Nicholson–Bailey type model. We prove that coevolutionarily stable prey and searching predators prefer patches that in isolation support higher prey and searching predator densities, respectively. Using this fact, we determine how environmental variation and predator handling times influence the spatial patterns of patch preferences, population abundances and per-capita predation rates. In particular, long predator handling times are shown to result in the coevolution of predator and prey aggregation. An analytic expression characterizing ecological stability of the coevolved populations is derived. This expression implies that contrary to traditional theoretical expectations, predator handling time can stabilize predator–prey interactions through its coevolutionary influence on patch preferences. These results are shown to have important implications for classical biological control.