The physiological and ecological mechanisms governing caste determination of social insects have been extensively studied. While much is known of the roles of endocrine and environmental factors that regulate the queen-worker caste determination, little is known of the developmental mechanisms that give rise to these dramatically divergent phenotypes. Here we test the hypothesis that caste determination in obligately sterile ants occurs during embryonic development. Using live-imagining and germ cell markers in the ant Monomorium pharonis , a species known to produce both reproductive and workers simultaneously, we discovered two-types of embryos: with and without germ cells that give rise sterile worker and reproductive-destined castes. We found that sterile and fertile embryos result from alternative migration of germ cells, where germ cells are either developing “in” the egg or “outside”, where they fail to migrate to the gonadal mesoderm. To further understand caste differentiation, we found that fog , and terminal signaling is differentially expressed between in-and-out embryos, where twist is expressed within germplasm and germ cells through gastrulation in sterile worker-destined embryos but is excluded from germplasm and germ cells in reproductive-destined embryos, indicating two developmental programs. Finally, we found that embryos show a bimodal distribution in germplasm size, indicating that embryos can differentially inherit maternal determinants pushing back caste determination to queen oogenesis. Altogether, this work demonstrates the evolution of a biological reproductive division of labor during ontogeny that precedes a behavioral reproductive division of labor in the adult, suggesting a role for germline developmental evolution to generate discrete castes.