Developmental arrest of Blimp1/Prdm1 mutant embryos at around embryonic day 10.5 (E10.5) has been attributed to placental disturbances. Here we investigate Blimp1/Prdm1 requirements in the trophoblast cell lineage. Loss of function disrupts specification of the invasive spiral artery-associated trophoblast giant cells (SpA-TGCs) surrounding maternal blood vessels and severely compromises the ability of the spongiotrophoblast layer to expand appropriately, secondarily causing collapse of the underlying labyrinth layer. Additionally, we identify a population of proliferating Blimp1⁺ diploid cells present within the spongiotrophoblast layer. Lineage tracing experiments exploiting a novel Prdm1.Cre-LacZ allele demonstrate that these Blimp1⁺ cells give rise to the mature SpA-TGCs, canal TGCs, and glycogen trophoblasts. In sum, the transcriptional repressor Blimp1/Prdm1 is required for terminal differentiation of SpA-TGCs and defines a lineage-restricted progenitor cell population contributing to placental growth and morphogenesis.