Time-lapse (TL) imaging provides a practical and safe tool to constantly monitor the development of in vitro-derived embryos. TL may help develop novel methods of predicting the timing of embryo cleavage that will lead to optimizing blastocyst cryopreservation or transfer. The primary objective of the present study was to employ TL imaging to examine associations among the division kinetics of ovine embryos, their quality and rates of development to the blastocyst stage. Oocytes were collected by ovary scarification from 78 Longwool ewes slaughtered in the breeding season (November–March). Cumulus oocyte complexes (COCs) were matured for 24 h in TCM 199 media containing 0.1 IU/mL LH/FSH and 10% FBS. In-vitro fertilization was carried out by co-incubation of semen and COCs for 19 h. Presumptive zygotes were placed in microwells, in droplets of Cult medium (Gynemed, Lensahn, Germany). Digital images of developing embryos were captured every 10 min by Primo Vision TL system (EVO+; Vitrolife, Göteburg, Sweden). The following time intervals were recorded: from IVF to the attainment of two-cell (t2), three-cells (t3) or four-cell (t4) stage, to morula detection (tM), blastulation (tSB) and blastocyst formation (tB). Lastly, the duration of the second cell cycle (cc2; t3-t2) and complete synchronous cell division (s2; t4-t3) were calculated, and the incidence of developmental anomalies noted. Out of 147 embryos selected for TL observations, 55 (37.4%) developed to the blastocyst stage (normally developing embryos, NE) and 92 (62.6%) failed to reach the blastocyst stage (arrested embryos, AE; P < 0.05). Mean t2, tM, s2 and cc2 were all less (P ≤ 0.02) in NE compared with AE. Approximately 61.9% of embryos exhibited developmental anomalies (35.5% in the NE group and 78.2% in the AE group; P < 0.05) and AE exceeded (P < 0.05) NE in the proportion of FRG (blastomeric fragmentation), IRR (blastomeres of irregular size after cleavage), DC (direct cleavage) and MA (multi-morphological aberrations). Of all NE, 63.6% were classified as good quality and 36.4% as poor quality blastocysts (P < 0.05). Good quality ovine blastocysts attained t2, t3, t4, tSB and tB stages earlier (P ≤ 0.03) than poor quality blastocysts and none of the poor quality blastocysts was seen to hatch. To recapitulate, the present results indicate that the kinetics of early ovine embryo development are significant predictors of their potential to develop to the blastocyst stage and the markers of blastocyst quality. Time-lapse imaging may serve as a useful technique for predicting the outcome and enhancing efficacy of in vitro embryo production in sheep.