Free-living aquatic embryos are often at risk of exposure to ultraviolet radiation (UV-R). Successful completion of embryonic development depends on efficient removal of DNA lesions, and thus many aquatic embryos have mechanisms to reverse DNA lesions induced by UV-R. However, little is known of how embryos that are able to enter embryonic dormancy may respond to UV-R exposure and subsequent DNA damage. Embryos of the annual killifish Austrofundulus limnaeus are unique among vertebrates because their normal embryonic development includes (1) a complete dispersion of embryonic blastomeres prior to formation of the definitive embryonic axis, and (2) entry into a state of metabolic depression and developmental arrest termed diapause. Here, we show that developing and diapausing embryos of A. limnaeus have exceptional tolerance of UV-C radiation and can successfully complete embryonic development after receiving substantial doses of UV-C, especially if allowed to recover in full-spectrum light. Recovery in full-spectrum light permits efficient removal of the most common type of DNA lesion induced by UV-R: cyclobutane pyrimidine dimers. Interestingly, whole-mount embryo TUNEL assays suggest that apoptosis may not be a major contributor to cell death in embryos UV-C irradiated during dispersion/reaggregation or diapause. We also observed embryo mortality to be significantly delayed by several weeks in diapausing embryos irradiated and allowed to recover in the dark. These atypical responses to UV-R induced DNA damage may be due to the unique annual killifish life history and provide insight into DNA damage repair and recognition mechanisms during embryonic dormancy.