Pairing of individuals occurs in their first year and this bond remains throughout their life. The breeding season is October to November, perhaps extending to January. The nest is carefully and tightly woven from grassy materials, reinforced with the green tips of plants, forming a rigid down facing spherical construction. The red-eared firetail's nest size, like that of its sister species the beautiful firetail, is the largest of grassfinches in Australia. The number of eggs in a clutch is between four and six, which hatch after an incubation period of fourteen days.
The total time of incubation duty is equal in length for each parent. The parents attend to the eggs alternately every one and a half to two hours. Each shift begins with a customary exchange between parents of the intimate nest call. When assuming his shift, males may arrive at the nest with a feather and continue this practice for eight days after the eggs hatch. When the young emerge from their eggs, both parents remain in the nest for several seconds or up to half an hour after a shift change. At night, parents and young remain tightly huddled in the nest. Attempts to violently dislodge nesting birds to test their resolve to remain with progeny, were unsuccessful. After the eggs hatch, the shells are removed from the nest and dropped some thirty to forty metres away.
The construction of the nest varies in form, resembling a bottle or retort, spherical or globular, with a long and narrow entrance that often faces downward. The external size of this nest range 160–195 mm in height, a width of 120–104 mm, and total length of 220–320 mm. The material used for construction of the nest is mostly fresh grass stems, clipped at the base and held vertically in the bill of the male for delivery to the female who builds the nest. At the peak of this activity, a male delivers one stem every thirty seconds. The interior is lined with feathers and other plant material and contains a two part spherical breeding chamber—one chamber is a finer walled cup-shaped nest. The material utilised in the outer face is often wiry and fibrous and difficult to prise apart. The interior is generally made of soft and green grass.