In most mammalian species, a key process of placenta development is the fusion of trophoblast cells into a highly specialized, multinucleated syncytiotrophoblast layer, through which most of the maternofetal exchanges take place. Little is known about this process, despite the recent identification of 2 pairs of envelope genes of retroviral origin, independently acquired by the human ( syncytin-1 and syncytin-2 ) and mouse ( syncytin-A and syncytin-B ) genomes, specifically expressed in the placenta, and with in vitro cell–cell fusion activity. By generating knockout mice, we show here that homozygous syncytin-A null mouse embryos die in utero between 11.5 and 13.5 days of gestation. Refined cellular and subcellular analyses of the syncytin-A -deficient placentae disclose specific disruption of the architecture of the syncytiotrophoblast-containing labyrinth, with the trophoblast cells failing to fuse into an interhemal syncytial layer. Lack of syncytin-A -mediated trophoblast cell fusion is associated with cell overexpansion at the expense of fetal blood vessel spaces and with apoptosis, adding to the observed maternofetal interface structural defects to provoke decreased vascularization, inhibition of placental transport, and fetal growth retardation, ultimately resulting in death of the embryo. These results demonstrate that syncytin-A is essential for trophoblast cell differentiation and syncytiotrophoblast morphogenesis during placenta development, and they provide evidence that genes captured from ancestral retroviruses have been pivotal in the acquisition of new, important functions in mammalian evolution.