Annual killifish adapted to life in aquatic habitat that seasonally dries have evolved desiccation resistant eggs capable of undergoing diapause, developmental arrest, at specific stages during embryology. Although noted for their remarkable abilities to live at the land-water interface, species in the genus Rivulus are considered non-annual killifish exhibiting typical teleost development patterns and no embryonic diapause. Here, we combine a molecular phylogeny with embryological study to demonstrate an independent origin of mid-embryonic diapause within a clade of Rivulus (subgenus Laimosemion) that inhabits small streams or savannah pools. We further observed that some of these species exhibit a short dispersed cell phase separating epiboly and the formation of the embryo axis – a feature of development only observed in annual killifish. Lastly, we incubated embryos of Laimosemion species and outgroup taxa in both water and peat moss, and observed that on peat moss embryos of all species are capable of delaying hatching for greater than 10 days, but when water-incubated there are significant differences among species in the length of this delay prior to hatching. We hypothesize that the preferred microhabitat of this clade of killifish exposes their embryos to periodic desiccation, creating selection in favor of embryonic diapause.