This article reviews the current state of knowledge concerning morphological and physiological mechanisms important to growth and differentiation of the mammalian blastocyst between compaction and implantation. Morphological processes occur in conjunction with major changes in transport systems that control the movement of substances into and out of the embryo. Compaction is a morphological development that is associated with the formation of an outer squamous epithelium, the trophectoderm, which regulates the composition of the medium bathing the presumptive embryo (the inner cell mass). Implantation involves the interaction of two epithelia, the adhesion between the trophectoderm and the maternal endometrium. Before adhesion, the blastocyst lies free in the uterine fluid and exchanges occur between this fluid and the embryo. Apposition of these epithelia is brought about in part by expansion of the blastocyst and removal of the uterine fluid. Blastocyst physiology is an inherently important field because vectorial transport system development and the genes that regulate it can be studied.