The market squid Doryteuthis opalescens deposits embryo capsules onto the continental shelf from Baja California to southern Alaska, yet little is known about the environment of embryo habitat. This study provides a baseline of environmental data and insights on factors underlying site selection for embryo deposition off southern California, and defines current essential embryo habitat using (1) remotely operated vehicle–supported surveys of benthos and environmental variables, (2) SCUBA surveys, and (3) bottom measurements of T, S, pH, and O₂. Here, embryo habitat is defined using embryo capsule density, capsule bed area, consistent bed footprint, and association with [O₂] and pH (pCO₂) on the shelf. Spatial variation in embryo capsule density and location appears dependent on environmental conditions, whereas the temporal pattern of year-round spawning is not. Embryos require [O₂] greater than 160 µmol and pH_T greater than 7.8. Temperature does not appear to be limiting (range: 9.9°C–15.5°C). Dense embryo beds were observed infrequently, whereas low-density cryptic aggregations were common. Observations of dense embryo aggregation in response to shoaling of low [O₂] and pH indicate habitat compression. Essential embryo habitat likely expands and contracts in space and time directly with regional occurrence of appropriate O₂ and pH exposure. Embryo habitat will likely be at future risk of compression given secular trends of deoxygenation and acidification within the Southern California Bight. Increasingly localized and dense spawning may become more common, resulting in potentially important changes in market squid ecology and management.