In marsupials and mice, the paternally derived X chromosome is preferentially inactivated in the placental tissues of female embryos. We show here that the X-linked homeobox gene Esx1 (refs 5,6), whose expression is restricted to extraembryonic tissues, is a chromosomally imprinted regulator of placental morphogenesis and trophoblast differentiation. Heterozygous female mice that inherited a mutant Esx1 allele from their father developed normally. Heterozygous females that inherited the Esx1 mutation from their mother, however, were born 20% smaller than normal and are identical in phenotype to hemizygous mutant males and homozygous mutant females. Although Esx1 mutant embryos were initially comparable in size with controls at 13.5 days post coitum (dpc), their placentas were significantly larger. Defects in the morphogenesis of the labyrinthine layer were observed as early as 11.5 dpc. Subsequently, vascularization abnormalities developed at the maternal-fetal interface, causing fetal growth retardation. These results identify Esx1 as the first essential X-chromosome-imprinted regulator of placental development that influences fetal growth, and may aid our understanding human placental insufficiency syndromes.