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Larva is the basic form of the Zerg. Each Larva contains the DNA of every Zerg strain and on command from the Overmind, will evolve into a Zerg specimen. Because Larvae morph into Drones which can then morph into buildings, Larvae is the source of everything in the Zerg arsenal. It is the source of power as well as a source for weakness in the Zerg. Larvae are produced from the Hatchery/Lair/Hive and can only hold three Larvae.
Playing Zerg requires effective Larvae management. The Hatchery can only maintain three larvae at once and often a Zerg player will build additional Hatcheries (not near a mineral line) simply to obtain more larvae. These Hatcheries are called "Macro Hatches". Zerg players must be certain with of the units they want to build with their Larvae. The Larvae turns into an egg before hatching into a Zerg unit. If the player cancels the build process, the egg is "aborted" and the player must wait for the Hatchery to produce another Larva. Because a Hatchery has three Larvae, Zergs can produce three units simultaneously unlike the other races which require three production structures to match the Zerg's capability.
Managing larvae often involves whether or not the Zerg player wants economy or an army. Using Larvae to build drones leads to a better economy but a smaller army and vice versa for building units. A Zerg must know when to build drones and when to build an army because Zerg cannot build both at once.
In Starcraft II, the Queen unit can inject four larvae into a Hatchery, reducing the need for "Macro Hatcheries". Mastering the Larvae Inject ability is key for Zerg in Starcraft II.