Trophoblast cells of the placenta are established at the blastocyst stage and differentiate into specialized subtypes after implantation. In mice, the outer layer of the placenta consists of trophoblast giant cells that invade the uterus and promote maternal blood flow to the implantation site by producing cytokines with angiogenic and vasodilatory actions. The innermost layer, called the labyrinth, consists of branched villi that provide a large surface area for nutrient transport and are composed of trophoblast cells and underlying mesodermal cells derived from the allantois. The chorioallantoic villi develop after embryonic day (E) 8.5 through extensive folding and branching of an initially flat sheet of trophoblast cells, the chorionic plate, in response to contact with the allantois. We show here that Gcm1, encoding the transcription factor glial cells missing-1 (Gcm1), is expressed in small clusters of chorionic trophoblast cells at the flat chorionic plate stage and at sites of chorioallantoic folding and extension when morphogenesis begins. Mutation of Gcm1 in mice causes a complete block to branching of the chorioallantoic interface, resulting in embryonic mortality by E10 due to the absence of the placental labyrinth. In addition, chorionic trophoblast cells in Gcm1-deficient placentas do not fuse to form syncytiotrophoblast. Abnormal development of placental villi is frequently associated with fetal death and intrauterine growth restriction in humans, and our studies provide the earliest molecular insight into this aspect of placental development.