Hatching plasticity allows animals to initiate hatching in response to environmental cues including predation, flooding, and hypoxia. In species with terrestrial eggs but aquatic larvae, hatching plasticity often manifests as extended development of embryos when water is not available. Although these effects are taxonomically widespread, little attention has focused on differences in plasticity across closely related species with terrestrial and aquatic embryos. We propose that the terrestrial embryonic environment favors slower and prolonged development and, consequently, that we should see differences in development between closely related species that differ in where they lay their eggs. We test this hypothesis by comparing embryonic development between two mole salamanders, Ambystoma opacum and A. annulatum. Most Ambystoma lay eggs submerged in ponds but A. opacum lays its eggs on land, where hatching is triggered when eggs are submerged by rising pond levels. Embryos of both species were reared under common laboratory conditions simulating both aquatic and terrestrial nest sites. Consistent with our hypothesis, we found that A. opacum embryos exhibited slower development and took longer to hatch than A. annulatum embryos in both rearing environments. Furthermore, we observed in A. opacum a plasticity in hatching stage that was absent in A. annulatum. Our results indicate that the terrestrial‐laying A. opacum has evolved slower and prolonged development relative to its aquatic‐laying congener and suggest that embryonic survival in the unpredictable terrestrial environment may be facilitated by developmental plasticity.