Install dnsmasq using Homebrew. Edit the dnsmasq.conf file (Homebrew will tell you where to put it) to contain:
address=/.dev/127.0.0.1
listen-address=127.0.0.1
Then make sure Dnsmasq is running (again follow Homebrew instructions).
Create the /etc/resolver/dev directory (using root) if it doesn't exist yet and create a resolver for .dev:
sudo bash -c 'echo "nameserver 127.0.0.1" > /etc/resolver/dev'
Then ping foo.dev and it should be pinging 127.0.0.1.
Note that dig foo.dev does not consult Dnsmasq, so test with ping instead.