Males search for mates by advertising outside the nesting area. After pairing, calling continues at the nest site to maintain the pair bond. During courtship, both birds stand erect, with flippers spread and head bowed, and walk in tight circles around the nest site, calling loudly as they go. Little Penguins form a long-term monogamous pair bond with a separation rate of about 18%. A bird will first breed when it is two to three years old. The breeding season varies in different parts of the country:
Burrows are dug by both parents (mainly the male) to a depth of 0.15 m, with an average of just over 0.4 m. The burrow can be as far as 200 m inland and 50 m above sea level. Dunes or other soft soil are usually chosen because they are easy to dig. In some localities, a pair may use a cave or crevice in the rocks. A penguin tends to return to the same part of the same colony each year, although not necessarily to the same burrow. Both parents contribute to nest building but the majority is done by the male. The nest may vary from a thick mat of grass to a few strands, usually collected within a few metres of the burrow entrance.
The parents defend a small area around the burrow entrance. As a result, burrows are usually spaced 5 m - 10 m apart, and rarely closer than 2 m. Aggressive encounters range from posturing and calling, to fights involving pecking, shoving and slapping with flippers. Young birds wandering out of their parents' territory will be attacked by other adults.
Both parents incubate the 55 mm x 42 mm white eggs, which become stained as incubation progresses. Although there are about 68 hours between the laying of the first and second egg, both hatch together. A newly hatched chick is covered with dark grey down, which is soon replaced by a second coat, chocolate brown in colour. Their eyes are just open at one day and are fully open at one week. Feathers start to emerge at four weeks, and by eight weeks, only a few patches of down remain.
Tending of the young is shared by the parents. Just a few days after the chicks hatch, the adults alternate daily, with one parent guarding the nest and the other foraging at sea. After about two weeks, both parents go to sea each day, returning in the evening or even staying away for several days. Hungry chicks beg vigorously to be fed, pursuing their parents until their persistence drives the adults from the nest.