A drenomedullin (AM) is a multifunctional peptide vasodilator that is essential for life. Plasma AM expression dramatically increases during pregnancy, and alterations in its levels are associated with complications of pregnancy including fetal growth restriction (FGR) and preeclampsia. Using AM^+/– female mice with genetically reduced AM expression, we demonstrate that fetal growth and placental development are seriously compromised by this modest decrease in expression. AM^+/– female mice had reduced fertility characterized by FGR. The incidence of FGR was also influenced by the genotype of the embryo, since AM^–/– embryos were more often affected than either AM^+/– or AM^+/+ embryos. We demonstrate that fetal trophoblast cells and the maternal uterine wall have coordinated and localized increases in AM gene expression at the time of implantation. Placentas from growth-restricted embryos showed defects in trophoblast cell invasion, similar to defects that underlie human preeclampsia and placenta accreta. Our data provide a genetic in vivo model to implicate both maternal and, to a lesser extent, embryonic levels of AM in the processes of implantation, placentation, and subsequent fetal growth. This study provides the first genetic evidence to our knowledge to suggest that a modest reduction in human AM expression during pregnancy may have an unfavorable impact on reproduction.