Purpose This prospective randomized study used sibling oocytes of 258 women with ≥8 oocytes to compare the effect of 5 % O 2 versus 20 % O 2 concentrations on embryo development and clinical outcome. Methods Oocytes of each case were divided between incubators with either 5 % or 20 % O 2 concentration. Outcome measures were fertilization, cleavage, embryo quality, blastocyst formation, and implantation, pregnancy and live birth rates. Results Fertilization and cleavage rates were similar in both groups. The 5 % O 2 group had significantly more blastomeres (P<0.05) and more top-quality embryos on day 3 (P<0.02), as well as significantly more available embryos for transfer (31.6 % vs. 23.1 % for the 20 % O 2 group; P<0.0001). There were significantly more cycles with good embryos in the 5 % group (76/258) than in the 20 % group (38/258) (P<0.0001). Implantation and pregnancy rates were significantly higher for 5 % O 2 embryos (P<0.03 and P<0.05, respectively). Live birth rates per embryo transfer were 34.2 % and 15.8 %, respectively, P<0.05. Conclusions Implantation, pregnancy and live birth rates are higher, and more good quality embryos are available for transfer and freezing with reduced rather than with atmospheric oxygen concentrations during embryo incubation.