The endothelial cell surface receptor thrombomodulin (TM) inhibits blood coagulation by forming a complex with thrombin, which then converts protein C into the natural anticoagulant, activated protein C. In mice, a loss of TM function causes embryonic lethality at day 8.5 p.c. (post coitum) before establishment of a functional cardiovascular system. At this developmental stage, TM is expressed in the developing vasculature of the embryo proper, as well as in non-endothelial cells of the early placenta, giant trophoblast and parietal endoderm. Here, we show that reconstitution of TM expression in extraembryonic tissue by aggregation of tetraploid wild-type embryos with TM-null embryonic stem cells rescues TM-null embryos from early lethality. TM-null tetraploid embryos develop normally during midgestation, but encounter a secondary developmental block between days 12.5 and 16.5 p.c. Embryos lacking TM develop lethal consumptive coagulopathy during this period, and no live embryos are retrieved at term. Morphogenesis of embryonic blood vessels and other organs appears normal before E15. These findings demonstrate a dual role of TM in development, and that a loss of TM function disrupts mouse embryogenesis at two different stages. These two functions of TM are exerted in two distinct tissues: expression of TM in non-endothelial extraembryonic tissues is required for proper function of the early placenta, while the absence of TM from embryonic blood vessel endothelium causes lethal consumptive coagulopathy.