Burrow-nesting affords protection from predators and climatic extremes, but potentially can pose physiological ‘problems’ for developing birds and attendant adults. Microclimate parameters of burrows of breeding Rainbow Bee-eaters (Merops ornatus) were measured to assess whether they presented such difficulties for young and adults. Estimated mean volume of the brood-chamber was ~4.5 L. Relative humidity was typically 100% in the brood-chamber and chamber air temperature was constant, averaging 4–6°C above ambient levels. The temperature regime of the burrow probably resulted in low thermoregulatory costs for attendant adults and endothermic nestlings. The chamber oxygen (O₂) fraction (mean 19.35%) was always lower than ambient values, but mostly not sufficiently low to be problematic for the growing young. Mean pre-internal pipping absolute oxygen consumption rate of embryos (62.9 ± 13.8 mL O₂ day^–1) did not appear to be strongly influenced by either the protracted incubation period or the reduced O₂ partial pressure of the chamber atmosphere. Mean eggshell water-vapour conductance (8.95 mg day^–1 kPa^–1) was tuned to egg mass rather than egg mass/incubation period. However, eggs still lost ~15% of their mass during incubation because the influence of the small water-vapour pressure difference across the shell (2.91 kPa) and the protraction of the incubation period apparently counteracted each other.