Environmental stress, such as oxygen deprivation, affects various cellular activities and developmental processes. In this study, we directly investigated Drosophila embryo development in vivo while cultured on a microfluidic device, which imposed an oxygen gradient on the developing embryos. The designed microfluidic device enabled both temporal and spatial control of the local oxygen gradient applied to the live embryos. Time-lapse live cell imaging was used to monitor the morphology and cellular migration patterns as embryos were placed in various geometries relative to the oxygen gradient. Results show that pole cell movement and tail retraction during Drosophila embryogenesis are highly sensitive to oxygen concentrations. Through modeling, we also estimated the oxygen permeability across the Drosophila embryonic layers for the first time using parameters measured on our oxygen control device.