Graphene quantum dots (GQDs) have emerged as promising biolabeling agents owing to their stable innate fluorescence, photostability, and biocompatibility as opposed to semiconductor quantum dots. While several studies reported GQDs to be cytocompatible, their potential for reproductive toxicity, particularly to germ cells that can cause transgenerational toxicity, remains unexplored. Here we report the intrinsic toxicity of 2−3 nm sized GQDs synthesized from glucose by a novel bottom-up green chemistry technique on germ cell proliferation and meiosis during early embryonic development. In vitro cell viability studies with a normal ovarian cell line, Chinese Hamster Ovarian cells (CHO), and a primary cell type, Human Umbilical Vein Endothelial Cells (HUVEC), portrayed good cytocompatibility even up to a high concentration of 800 μg/mL. When embryos of Japanese medaka were exposed to GQDs, no developmental toxicity was observed up to 250 μg/mL, beyond which hatchability and survival were affected adversely. In contrast, toxicity to germ cells in developing gonads was apparent in genetically female (XX) embryos exposed to much lower doses (50, 75, and 100 μg/mL), at which in vitro cytotoxicity and embryo hatchability and survival were unaffected. A drastic decline in germ cell number and meiosis was observed at these doses in XX embryos implying anomalies in sexual differentiation of the gametes. Conversely, germ cells of genetically male embryos exposed to GQDs were unaltered. Significantly high levels of reactive oxygen species (ROS) were detected in the XX larvae exposed to GQDs; however, there was no DNA damage, suggesting ROS to be responsible for the adverse effects observed.