Permethrin is a commonly used, highly effective pesticide in poultry agriculture, and has recently been trialed in conservation efforts to protect Galápagos finch hatchlings from an invasive ectoparasite. Although permethrin is considered safe for adults, pesticides can have health consequences when animals are exposed during early life stages. The few studies that have examined permethrin's effects in embryonic chicks and rats have shown hydrocephaly, anencephaly, reduced cellular energy conversion, and disruption of developing heart muscle. To test whether trans‐ovo exposure of permethrin affects early development in birds, we exposed Japanese quail (Coturnix japonica) eggs to cotton treated with 1% permethrin that was incorporated into nests in two amounts (0.2, 0.8 g), each with a paired untreated cotton control group. When measured on incubation Day 15, we found permethrin‐treated developing birds were smaller and showed signs of microcephaly, although mortality rates were the same. Despite no difference in heart mass, ventricular tissue was less compact, cardiac arteries were reduced and heart rates were slower in permethrin‐treated birds. Differences in heart development were also observed at 5 days of incubation, indicating that abnormalities are present from early in cardiac development. Future studies are needed to examine permethrin's effects on developmental pathways and to determine if these effects persist after hatching to affect offspring health. This study provides evidence that permethrin can cross the eggshell to cause non‐lethal but adverse effects on embryonic development, and studies should look beyond hatching when monitoring the efficacy of permethrin on wild bird populations.