The inactivation of the retinoblastoma (Rb) tumor suppressor gene in mice results in ectopic proliferation, apoptosis, and impaired differentiation in extraembryonic, neural, and erythroid lineages, culminating in fetal death by embryonic day 15.5 (E15.5). Here we show that the specific loss of Rb in trophoblast stem (TS) cells, but not in trophoblast derivatives, leads to an overexpansion of trophoblasts, a disruption of placental architecture, and fetal death by E15.5. Despite profound placental abnormalities, fetal tissues appeared remarkably normal, suggesting that the full manifestation of fetal phenotypes requires the loss of Rb in both extraembryonic and fetal tissues. Loss of Rb resulted in an increase of E2f3 expression, and the combined ablation of Rb and E2f3 significantly suppressed Rb mutant phenotypes. This rescue appears to be cell autonomous since the inactivation of Rb and E2f3 in TS cells restored placental development and extended the life of embryos to E17.5. Taken together, these results demonstrate that loss of Rb in TS cells is the defining event causing lethality of Rb(-/-) embryos and reveal the convergence of extraembryonic and fetal functions of Rb in neural and erythroid development. We conclude that the Rb pathway plays a critical role in the maintenance of a mammalian stem cell population.