Reproduction and larval development of the red squat lobster Pleuroncodes monodon is strongly linked to temperature changes provoked by upwelling along the Chilean coast. Here, we propose the hypothesis that both the breeding cycle and the spatial distribution of egg-bearing females of P. monodon in Costa Rica are related to decreasing water temperatures during seasonal coastal upwelling. To describe the breeding cycle, squat lobsters were collected between February 2007 and January 2008 from the Central Pacific coast of Costa Rica. The presence of egg-bearing females in other areas of the Costa Rican coast was studied from samples collected during two latitudinal research cruises (August 2008: rainy season; May 2009: dry season). Our results revealed that P. monodon has a marked seasonal breeding period (from November to March), which is associated with decreasing water surface temperatures registered during coastal upwelling events. All females with embryos close to hatching were found in areas surrounding the Gulf of Nicoya, when upwelling events have been reported. The near absence of egg-bearing females in zones where upwelling does not occur suggests the existence of a strong correlation between upwelling events and the breeding cycle of P. monodon. Our information should be considered when developing management measures for the sustainable use of this potential fishery resource in the Pacific coast of Central America.