Embryology of the hermaphroditic and dimorphic alcyonacean Heteroxenia fuscescens has been examined by scanning electron microscopy and light microcopy. Initial embryonic development in this octocoral occurs while the embryos migrate freely inside the anthocodiae and the tentacles. Immature planulae are extruded externally into intersiphonozooid spaces, where they mature. All stages of planular morphogenesis, from egg to planula, occur while the embryo is coated by the original egg mesogleal coat derived from the parent colony. Hatching from this mesogleal coat occurs as late as immediately prior to planulation. H. fuscescens demonstrates highly specialized brood care involving the retention of embryos in internal polyp cavities as well as in external spaces. This highly specialized brood care, coupled with the embryo coating, may provide better protection for the embryo and greater fecundity for the colony.