Embryogenesis in placental mammals is sustained by exquisite interplay between the embryo proper and placenta. UTF1 is a developmentally regulated gene expressed in both cell lineages. Here, we analyzed the consequence of loss of the UTF1 gene during mouse development. We found that homozygous UTF1 mutant newborn mice were significantly smaller than wild-type or heterozygous mutant mice, suggesting that placental insufficiency caused by the loss of UTF1 expression in extra-embryonic ectodermal cells at least in part contributed to this phenotype. We also found that the effects of loss of UTF1 expression in embryonic stem cells on their pluripotency were very subtle. Genome structure and sequence comparisons revealed that the UTF1 gene exists only in placental mammals. Our analyses of a family of genes with homology to UTF1 revealed a possible mechanism by which placental mammals have evolved the UTF1 genes.