BRUCE is a highly conserved 528-kDa peripheral membrane protein of the trans-Golgi network. Owing to the presence of an N-terminal single baculovirus inhibitor repeat, BRUCE functions as an inhibitor of apoptosis protein and blocks apoptosis when overexpressed. In addition, due to the presence of a C-terminal ubiquitin-conjugating domain, BRUCE can covalently attach ubiquitin to substrates. Here we report the generation and characterization of BRUCE-deficient mice. Complete inactivation of the BRUCE gene resulted in perinatal lethality and growth retardation discernible after embryonic day 14. The growth defect is linked to impaired placental development and may be caused by insufficient oxygen and nutrient transfer across the placenta. Chorioallantoic placentation initiated normally, but the mutant placenta showed an impaired maturation of the labyrinth layer and a significant reduction of the spongiotrophoblast. No evidence for an elevated apoptosis rate was detectable in embryonic and extraembryonic tissues and in knockout fibroblasts. Thus, although BRUCE is broadly expressed in embryonic, extraembryonic, and adult mouse tissues, this bifunctional protein might play a unique role in normal trophoblast differentiation and embryonic survival.