Mice lacking suppressor of cytokine signaling 3 (SOCS3) exhibited embryonic lethality with death occurring between days 11 and 13 of gestation. At this stage, SOCS3^−/− embryos were slightly smaller than wild type but appeared otherwise normal, and histological analysis failed to detect any anatomical abnormalities responsible for the lethal phenotype. Rather, in all SOCS3^−/− embryos examined, defects were evident in placental development that would account for their developmental arrest and death. The placental spongiotrophoblast layer was significantly reduced and accompanied by increased numbers of giant trophoblast cells. Delayed branching of the chorioallantois was evident, and, although embryonic blood vessels were present in the labyrinthine layer of SOCS3^−/− placentas, the network of embryonic vessels and maternal sinuses was poorly developed. Yolk sac erythropoiesis was normal, and, although the SOCS3^−/− fetal liver was small at day 12.5 of gestation (E12.5), normal frequencies of erythroblasts and hematopoietic progenitor cells, including blast forming unit-erythroid (BFU-E) and, colony forming unit-erythroid (CFU-E) were present at both E11.5 and E12.5. Colony formation for both BFU-E and CFU-E from SOCS3^−/− mice displayed wild-type quantitative responsiveness to erythropoietin (EPO), in the presence or absence of IL-3 or stem cell factor (SCF). These data suggest that SOCS3 is required for placental development but dispensable for normal hematopoiesis in the mouse embryo.