Bone-eating worms of the genus Osedax exclusively inhabit sunken vertebrate bones on the seafloor. The unique lifestyle and morphology of Osedax spp. have received much scientific attention, but the whole process of their development has not been observed. We herein report the postembryonic development and settlement of Osedax japonicus Fujikura et al. (Zool Sci 23:733-740, 2006). Fertilised eggs were spawned into the mucus of a female, and the larvae swam out from the mucus at the trochophore stage. Larvae survived for 10 days under laboratory conditions. The larvae settled on bones, elongated their bodies and crawled around on the bones. Then they secreted mucus to create a tube and the palps started to develop. The palps of O. japonicus arose from the prostomium, whereas the anterior appendages of other siboglinids arose from the peristomium. The recruitment of dwarf males was induced by rearing larvae with adult females. Females started to spawn eggs 6 weeks after settlement.