Embryonic development of Pycnogonida (sea spiders) is poorly understood in comparison to other euarthropod lineages with well-established model organisms. However, given that pycnogonids potentially represent the sister group to chelicerates or even to all other euarthropods, their development might yield important data for the reconstruction of arthropod evolution. Using scanning electron microscopy, fluorescent nucleic staining and immunohistochemistry, the general course of embryonic morphogenesis in Pseudopallene sp. (Callipallenidae), a pycnogonid with prolonged embryonic development, is described. A staging system comprising ten stages is presented, which can be used in future studies addressing specific developmental processes. The initially slit-like stomodeum anlage forms at the anterior end of an eight-shaped germ band and predates proboscis outgrowth. The latter process is characterized by the protrusion of three cell populations that are subsequently involved in pharynx formation. In later stages, the proboscis assumes distally a horseshoe-like shape. At no time, a structure corresponding to the euarthropod labrum is detectable. Based on the complete lack of palpal and ovigeral embryonic limbs and the early differentiation of walking leg segments 1 and 2, the existence of an embryonized protonymphon stage during callipallenid development is rejected. The evolution of pycnogonid hatching stages, especially within Callipallenidae and Nymphonidae, is re-evaluated in the light of recent phylogenetic analyses. Specifically, the re-emergence of the ancestral protonymphon larva (including re-development of palpal and ovigeral larval limbs) and a possible re-appearance of adult palps in the nymphonid lineage are discussed. This challenges the perception of pycnogonid head appendage evolution as being driven by reduction events alone.