Fishes of the jawfish family Opistognathidae are cryptobenthic and distributed in subtropical seas, and new species are still being reported. Opistognathus spp. live alone in burrows and males orally brood their egg clutches. The life cycle of jawfish, including their reproductive behaviour, is poorly understood. Here we describe the natural reproduction and embryonic development of Opistognathus iyonis in Yamaguchi, Japan, based on underwater surveys for 3 years. Spawning was observed as female jawfish came into the male's burrow ~30 min before sunrise. The jawfish had a mean number of 4.4 egg clutches in the burrow through 48.2 days, and the egg took 12 days to hatching. The mean temperature for developmental days was 20.8°C. The mean and cumulative water temperature during development significantly correlated with the number of developmental days. During egg development, male jawfish took care of eggs by holding them for part of the time in their mouths. Hatching was observed ~20 min after sunset. When hatching occurred orally, eggs were pushed out and back repeatedly using the lower jaw; consequently, the egg clutches were let out in an upward direction. To our best knowledge, this is the first report of the reproductive behaviour of O. iyonis in the natural environment in the same area for several years.