Despite the fact that Hydra has been studied for more than 200 years, we know surprisingly little about its life history. We show that Hydra vulgaris embryos hatch sporadically over a period ranging from a few days to nine months. We also report, for what seems to be the first time, the presence of Hydra in a vernal pool. Phylogenetic analysis and sexual crossing show that this Hydra is a member of the cosmopolitan Vulgaris clade and is not reproductively isolated from other members of the clade. Our findings lead us to hypothesize that Hydra evolved in an unstable freshwater habitat in which survival required that its life cycle include the use of a bet-hedging reproductive strategy and the formation of an embryo that is desiccation resistant and that can remain dormant for long periods of time.