Most egg-laying vertebrates hatch without depleting the entire yolk reserve. The residual yolk is internalized before emergence from the egg is completed and the yolk is subsequently metabolized during early neonatal life. Here we provide the first description of the mechanism of yolk internalization in non-avian reptiles. We describe the hatching of two lizard species (Physignathus lesueurii and Varanus rosenbergii) and provide a step-by-step account of sequence of events leading to yolk internalization and emergence from the egg. We also conducted incubation experiments to determine the cause of failed yolk internalization. Contraction of the ruptured amnion is the mechanism by which the residual yolk is internalized, which provides an explanation for the functional significance of amniotic contractions. Failures of internalization occur when the amount of residual yolk exceeds that which can be enclosed by the ruptured amnion. We conclude that, because of the connections formed between the amnion and both the allantois and chorion, the pipping and retraction of the amnion pulls the chorioallantoic membrane (CAM) off the surface of the eggshell, which impairs the capacity for gas exchange and forces the embryo to breach the eggshell to commence breathing. We further speculate that the loss of amniotic contractions in mammals may indicate an incompatibility of amnion-assisted yolk internalization with viviparity, an evolutionary process that could be tested by examining viviparous squamates.