Introduction: The development of gastroschisis remains an area of controversy. Various theories have been proposed, but none has ever been supported by a thorough embryological study. Material and Methods: We herein report anatomical and microscopic observations of the developing abdominal wall and cord of embryos and fetuses, along with clinical features of gastroschisis. Results: It appears that the developing cord normally has two parts, a firm left-sided part formed by the vessels and urachus, and a thin right-sided pouch covering the intestinal loops (the ‘physiological umbilical hernia'), which could rupture, giving the basis of gastroschisis. Discussion: Gastroschisis could be the result of amniotic damage, possibly from some as yet unidentified toxin. Further bowel damage can be explained by the subsequent mesenteric injury.