Varanus rosenbergi females oviposit in nests excavated in termite mounds in summer, and hatching occurs the following spring after a seven-month incubation period. In this study, we characterized developmental features associated with the prolonged incubation of this species at Kangaroo Island in South Australia. Oviposition occurs shortly after limb buds have formed, and the subsequent pattern of organogenesis is similar to that of other lizards. Survival of eggs incubated at constant temperatures ranging from 26-33°C was 89-100%, whereas survival at 24°C and at 35°C was 0 and 14%, respectively. During the incubation period, mean ambient temperature at Kangaroo Island (14-15°C) is too low for successful reproduction, whereas mean temperatures in termite mounds (27-37°C) are substantially warmer and similar to the estimated mean incubation temperature (26-27°C). Therefore, successful reproduction by V. rosenbergi in southern Australia may be contingent on nesting in termitaria. Varanids, in general, have incubation lengths that are substantially longer than those of most other squamates, turtles, and crocodilians. We hypothesize that varanids have prolonged incubation lengths primarily as an adaptation to maximize hatchling fitness because their emergence from nests in the warm and/or wet season of the year following oviposition is the time most favorable for growth and survival. Other factors that may contribute to prolonged incubation are the developmental costs of a large brain and the energy costs associated with nest locations and substrates that may make emergence difficult for hatchlings.