The evolution of key innovations promotes adaptive radiations by opening access to new ecological opportunity. The acquisition of viviparity (live‐bearing reproduction) has emerged as one such innovation explaining reptile proliferations into extreme climates. By evolving viviparity, females provide embryos with internally stable environments to complete development. The classical hypothesis suggests that natural selection for viviparity arises from low temperatures in cold climates, which promote prolonged egg retention in the mother's body. An alternative hypothesis proposes that declines in atmospheric oxygen at high elevations create natural selection for embryo retention to provide them with optimal oxygen levels during development. However, although experimental studies support the negative effects of low oxygen on egg development, this ‘hypoxia’ hypothesis has never been tested quantitatively. Here, we compete the hypoxia hypothesis against the ‘cold‐climate’ hypothesis, using a highly diverse lizard genus.