Choroideremia (CHM) is a hereditary eye disease caused by mutations in the X-linked CHM gene. Disruption of the Chm gene in mice resulted in prenatal death of Chm⁻/Y males and Chm⁻/Chm⁺ females that had inherited the mutation from their mothers. Male chimeras and Chm⁺/Chm⁻ females with paternal transmission of the mutation were viable and had photoreceptor degeneration reminiscent of human choroideremia. Here, we show that Chm⁻/Y males and Chm⁻/Chm⁺ females were retarded at e7.5 and died before e11.5 due to multiple defects of the extra-embryonic tissues. Mutant embryos exhibited deficiency of diploid trophoblasts associated with overabundance of giant cells. In yolk sac and placenta, severe defects in vasculogenesis were obvious. Chm⁻/Y males exhibited more pronounced phenotypes than Chm⁻/Chm⁺ females. The lethal genotypes could be rescued by tetraploid aggregation. Chm⁻/Chm⁺ females, but not Chm⁻/Y males, could also be rescued when their Chm⁺/Chm⁻ mothers were mated with Mus spretus males. Backcross analysis suggested that the viability of interspecies hybrid Chm⁻/Chm⁺ females may be due to expression from the Chm allele on the M. spretus X-chromosome rather than a modifier effect. Our results demonstrate that Chm is essential for diploid trophoblast development and plays a role in the vascularization in placenta and yolk sac.