Abstract On the roofs of subtidal crevices, the giant cuttlefish (Sepia apama) of southern Australia lays clutches of lemon-shaped eggs which hatch after 3 to 5mo. Diffusion of oxygen through the capsule and chorion membrane to the perivitelline fluid and embryo was modelled using the equation VO2=GO2(PO2outPO2in), where VO2=rate of oxygen consumption, GO2=oxygen conductance of the capsule, and PO2 values=oxygen partial pressures across the capsule. During development, VO2 rose exponentially as the embryo grew, reaching 5.5lh1 at hatching. Throughout development, the capsule dimensions enlarged by absorption of water into the perivitelline space, increasing GO2 by a combination of increasing surface area, and decreasing thickness of the capsule. These processes maintained PO2in high enough to allow unrestricted VO2 until shortly before hatching. Diffusion limitation of respiration in hatching-stage embryos was demonstrated by (1) increased embryonic VO2 when PO2out was experimentally raised, (2) greater VO2 of resting individuals immediately after hatching, and (3) reduced VO2 of hatchlings at experimental PO2 levels higher than PO2in before hatching. Thus, low PO2in may be the stimulus to hatch. Potential problems of diffusive gas-exchange are mitigated by the relatively low incubation temperature (12C), which may be a factor limiting the distribution of the species to cool, southern waters.