Eutherian placenta, an organ that emerged in the course of mammalian evolution, provides essential architecture, the so-called feto-maternal interface, for fetal development by exchanging nutrition, gas and waste between fetal and maternal blood. Functional defects of the placenta cause several developmental disorders, such as intrauterine growth retardation in humans and mice. A series of new inventions and/or adaptations must have been necessary to form and maintain eutherian chorioallantoic placenta, which consists of capillary endothelial cells and a surrounding trophoblast cell layer(s). Although many placental genes have been identified, it remains unknown how the feto-maternal interface is formed and maintained during development, and how this novel design evolved. Here we demonstrate that retrotransposon-derived Rtl1 (retrotransposon-like 1), also known as Peg11 (paternally expressed 11), is essential for maintenance of the fetal capillaries, and that both its loss and its overproduction cause late-fetal and/or neonatal lethality in mice.