During human placental development, specialized cells allocated to the extraembryonic lineage (cytotrophoblasts) invade the uterus, anchoring the conceptus to the decidua and tapping a supply of maternal blood. This unusual behavior requires cytotrophoblasts to assume highly specialized characteristics; some are commonly associated with tumor cells, while others are typical of endothelia. Here we investigated the transcriptional mechanisms that control cytotrophoblast differentiation/invasion. Specifically, we examined the cells' expression of a number of transcription factors, at the RNA level, as they differentiated along the invasive pathway in vitro. Since basic helix‐loop‐helix (bHLH) proteins play important roles in murine trophoblast differentiation, we first examined their expression by cytotrophoblasts. As in murine placental development, expression of the human homologue of Mash‐2 was confined to progenitor cells. But expression of Hand‐1, which promotes differentiation of murine trophoblast giant cells, was not detected. We also found that cytotrophoblasts upregulated the expression of bHLH/PAS factors that function in adaptive responses to hypoxia, including hEPAS‐1, which is expressed primarily in endothelial cells. Quite unexpectedly, we discovered that cytotrophoblasts express high levels of mRNA encoding the human homologue of the Drosophila neuronal fate gene, glial cells missing‐1 (gcm‐1). We also found evidence of crosstalk between the bHLH and GCM‐1 regulatory networks. Together, these results offer insights into the transcriptional mechanisms that govern cytotrophoblast differentiation/invasion. Interestingly, these mechanisms suggest analogies with those that govern differentiation of murine stem cells allocated to both the intra‐ and extraembryonic lineages. Dev. Genet. 25:146–157, 1999. © 1999 Wiley‐Liss, Inc.