Embryos of the marine killifish Fundulus heteroclitus are adapted to survive aerially. However, it is unknown if they are able to control development under dehydration conditions. Here, we show that air-exposed blastula embryos under saturated relative humidity were able to stimulate development, and hence the time of hatching was advanced with respect to embryos continuously immersed in seawater. Embryos exposed to air at later developmental stages did not hatch until water was added, while development was not arrested. Air-exposed embryos avoided dehydration probably because of their thickened egg envelope, although it suffered significant evaporative water loss. The potential role of aquaporins as part of the embryo response to dehydration was investigated by cloning the aquaporin-0 (FhAqp0), -1a (FhAqp1a) and -3 (FhAqp3) cDNAs. Functional expression in Xenopus laevis oocytes showed that FhaAqp1a was a water-selective channel, whereas FhAqp3 was permeable to water, glycerol and urea. Expression of fhaqp0 and fhaqp1a was prominent during organogenesis and their mRNA levels were similar between water- and air-incubated embryos. However, fhaqp3 transcripts were highly and transiently accumulated during gastrulation, and the protein product was localized in the basolateral membrane of the enveloping epithelial cell layer and in the membrane of ingressing and migrating blastomers. Interestingly, both fhaqp3 and FhAqp3 polypeptides were down-regulated in air-exposed embryos. These data demonstrate that killifish embryos respond adaptively to environmental desiccation by accelerating development, and that embryos are able to transduce dehydration conditions into molecular responses. The reduced synthesis of FhAqp3 may be one of these mechanisms to regulate water and/or solute transport in the embryo.