Anatomy
Red wiggler worms, like other earthworms, are hermaphroditic. This means that every worm has both male and female organs. The reproductive organ is called the clitellum. It is a smooth band of tissue that encircles the worm near the anterior, or head, end of the worm. This structure forms when the worm is about a month to a month-and-a-half old. Every worm has this structure, and it is where reproduction takes place.
Mating
Despite the fact that every worm has both male and female parts, it cannot mate with itself. Each worm must mate with another worm to produce fertilized eggs. To mate, the worms come together so that their heads point in opposite directions. The clitellums are pressed together, and sperm is passed between them. Each worm stores the sperm from the other in an internal sac until it is ready to use it.
Cocoons
After mating takes place, both worms will begin to develop a tiny cocoon on the clitellum. As it forms, the cocoon begins to narrow. The worm will back out of it as it shrinks down to become smaller than a grain of rice. It is at this point that both eggs and sperm are deposited in each cocoon. When the worm has backed out completely, the cocoon seals itself. One to five eggs are fertilized and begin to develop into baby worms.
Hatching
About two or three weeks after fertilization, the baby worms hatch from the cocoon. They are only about 1/2 to 1 inch long, very thin and white. They are able to take care of themselves from the moment they hatch, and in a month and a half they are ready to mate and produce eggs of their own. The exception to this process is that if conditions are not right for the survival of the baby worms, such as very dry soil or other poor conditions, the cocoons will lie dormant in the soil until things improve, even if it takes years. Once the problem has been resolved, the eggs will develop and hatch.