Many oviparous terrestrial species deposit flexible-shelled eggs into the soil. These eggs are sensitive to the hydration level of the nest environment. Among other factors, water exchange of eggs during incubation may be affected by the soil water potential. To evaluate whether egg aggregation influences embryonic development, we incubated flexible-shelled Schreiber's green lizard (Lacerta schreiberi) eggs under three levels of soil water potential (wet: –150 kPa; intermediate: –650 kPa; dry: –1150 kPa) and under two levels of aggregation (aggregated: in groups of six eggs with physical contact among them; isolated: groups of six eggs each 1 cm apart). The availability of water during egg incubation influenced egg mass and hatchling size. Eggs incubated in dry soils absorbed less water and produced smaller hatchlings. The selected levels of soil water potential did not influence incubation duration or hatching success. When soil was wet or dry, we did not find any effect of egg aggregation in embryonic development. However, when soil water potential was intermediate, aggregated eggs absorbed less water and their embryos hatched at smaller sizes compared with isolated eggs. Moreover, variability and range of egg water absorption and hatchling size were higher among aggregated eggs than among solitary ones when access to water was restricted. In these cases, eggs competed with different success for water, a limited resource in the nest environment.