Theories on the evolution of clutch size are primarily influenced by examples from terrestrial animals, yet most animal phyla occur exclusively in water. Oxygen has a lower diffusion coefficient and lower solubility in water than in air, and siblings in aquatic clutches often compete for oxygen. Mitigating this competition could affect allocation of resources to offspring. Gelatinous clutches are common in aquatic habitats and have evolved multiple times in many phyla. We hypothesized that spacing of embryos by gel enhances delivery of oxygen but that gel is organically costly. A model of diffusion predicts that clutch thickness should scale inversely with the square root of embryo concentration, indicating a need to reduce embryo concentration (and increase gel volume) disproportionately with increasing clutch thickness. For embryos in artificial clutches constructed with agarose gel, development was faster in clutches with more gel per embryo, as predicted. For natural gelatinous clutches of gastropods, thick clutches had disproportionately larger volumes of gel and disproportionately more organic material invested in gel relative to embryos. Thus, for aquatic gelatinous clutches, requirements for oxygen supply can affect trade-offs involving clutch thickness and parental investment per offspring: resources are diverted to gel, and the proportion diverted increases with clutch thickness.