Transposable elements (TEs) are mobile DNA elements found at high frequency in mammalian genomes. Although these elements are generally perceived as genomic parasites, they have the potential to influence host genome function in many beneficial ways. This article discusses the role TEs have played in the evolution of the placenta and pregnancy in viviparous mammals. Using examples from our own research and the literature, we argue that frequent recruitment of TEs, in particular of retroelements, has facilitated the extreme diversification of tissues at the maternal-fetal interface. We also discuss the mechanisms by which TEs have been recruited for functions during pregnancy. We argue that retroelements are pre-adapted to becoming cis-regulatory elements for host genomes because they need to utilize host regulatory signals for their own life cycle. However, although TEs contain some of the signals necessary for host functions upon insertion, they often require modification before acquiring a biological role in a host tissue. We discuss the process by which one TE was transformed into a promoter for prolactin expression in the endometrium, describing a model for TE domestication called 'epistatic capture'.