Mouse sperm with and without trehalose were desiccated under nitrogen gas and stored at 4°C and 22°C. After rehydration, sperm were injected into oocytes using intracytoplasmic sperm injection and embryonic development was followed. Sperm were dried for 5.0, 6.25, or 7.5 min, stored at 22°C for 1 wk with and without trehalose. The percentages of blastocysts that developed from sperm with trehalose were 51%, 31%, and 20%, respectively, which was significantly higher than sperm without trehalose (10%, 3%, and 5%, respectively). Desiccation and storage in medium with trehalose significantly increased sperm developmental potential compared to medium without trehalose. Sperm dried for 5 min produced more blastocysts than sperm dried for 6.25 or 7.5 min. When sperm were dried in trehalose for 5 min and stored for 1 wk, 2 wk, 1 mo, or 3 mo at 4°C, the percentages of blastocysts were 73%, 84%, 63%, and 39%; whereas those stored at 22°C for 1 wk, 2 wk, or 1 mo were significantly lower (53%, 17%, and 6%, respectively). Embryos from sperm partially desiccated in trehalose for 5 min and stored at 4°C for 1 or 3 mo were transferred to 10 pseudopregnant recipients. Implantation rates were 81% and 48%; live fetuses were 26% and 5%, respectively. One of the recipients delivered three live fetuses. The results show that trehalose has a significant beneficial effect in preserving the developmental potential of mouse sperm following partial desiccation and storage at temperatures above freezing.