Background: Annual killifishes are adapted to surviving and reproducing over alternating dry and wet seasons. During the dry season, all adults die and desiccation-resistant embryos remain encased in dry mud for months or years in a state of quiescence, delaying hatching until their habitats are flooded again. Embryonic development of annual killifishes deviates from canonical teleost development. Epiblast cells disperse during epiboly, and a dispersed phase precedes gastrulation. In addition, annual fish have the ability to enter diapause and block embryonic development at the dispersed phase (diapause I), mid-somitogenesis (diapause II) and the final phase of development (diapause III). Developmental transitions associated with diapause entry and exit can be linked with cell cycle events. Here we set to image this transitions in living embryos. Results: To visibly explore cell cycle dynamics during killifish development in depth, we created a stable transgenic line in Nothobranchius furzeri that expresses two fluorescent reporters, one for the G1 phase and one for the S/G2 phases of the cell cycle, respectively (fluorescent ubiquitination based cell cycle indicator, FUCCI). Using this tool, we observed that, during epiboly, epiblast cells progressively become quiescent and exit the cell cycle. All embryos transit through a phase where dispersed cells migrate, without showing any mitotic activity, possibly blocked in the M phase (diapause I). Thereafter, exit from diapause I is synchronous and cells enter directly into the S phase without transiting through G1. The developmental trajectories of embryos entering diapause and of those that continue to develop are different. In particular, embryos entering diapause have reduced growth along the medio-lateral axis. Finally, exit from diapause II is synchronous for all cells and is characterized by a burst of mitotic activity and growth along the medio-lateral axis such that, by the end of this phase, the morphology of the embryos is identical to that of direct-developing embryos. Conclusions: Our study reveals surprising levels of coordination of cellular dynamics during diapause and provides a reference framework for further developmental analyses of this remarkable developmental quiescent state.