Epithelial membrane protein‐2 (EMP2) is a tetraspan protein predicted to regulate placental development. Highly expressed in secretory endometrium and trophectoderm cells, previous studies suggest that it may regulate implantation by orchestrating the surface expression of integrins and other membrane proteins. In order to test the role of EMP2 in pregnancy, mice lacking EMP2 (Emp2^−/−) were generated. Emp2^−/− females are fertile but have reduced litter sizes when carrying Emp2^−/− but not Emp2^+/− fetuses. Placentas of Emp2^−/− fetuses exhibit dysregulation in pathways related to neoangiogenesis, coagulation, and oxidative stress, and have increased fibrin deposition and altered vasculature. Given that these findings often occur due to placental insufficiency resulting in an oxygen‐poor environment, the expression of hypoxia‐inducible factor‐1 alpha (HIF‐1α) was examined. Placentas from Emp2^−/− fetuses had increased total HIF‐1α expression in large part through an increase in uterine NK (uNK) cells, demonstrating a unique interplay between uNK cells and trophoblasts modulated through EMP2. To determine if these results translated to human pregnancy, placentas from normal, term deliveries or those complicated by placental insufficiency resulting in intrauterine growth restriction (IUGR) were stained for EMP2. EMP2 was significantly reduced in both villous and extravillous trophoblast populations in IUGR placentas. Experiments in vitro using human trophoblast cells lines indicate that EMP2 modulates angiogenesis by altering HIF‐1α expression. Our results reveal a novel role for EMP2 in regulating trophoblast function and vascular development in mice and humans, and suggest that it may be a new biomarker for placental insufficiency. Copyright © 2017 Pathological Society of Great Britain and Ireland. Published by John Wiley & Sons, Ltd.