ABSTRACT Embryonic lethality of thrombomodulin-deficient mice has indicated an essential role for this regulator of blood coagulation in murine development. Here, the embryonic expression pattern of thrombomodulin was defined by surveying β-galactosidase activity in a mouse strain in which the reporter gene was placed under the regulatory control of the endogenous thrombomodulin promoter via homologous recombination in embryonic stem cells. The murine trophoblast was identified as a previously unrecognized anatomical site where TM expression is conserved between humans and mice and may exert a critical function during postimplantation development. Targeted reporter gene expression in mesodermal precursors of the endothelial cell lineage defined thrombomodulin as an early marker of vascular differentiation. Analysis of the thrombomodulin promoter in differentiating ES cells and in transgenic mice provided evidence for a disparate and cell type-specific gene regulatory control mechanism in the parietal yolk sac. The thrombomodulin promoter as defined in this study will allow the targeting of gene expression to the parietal yolk sac of transgenic mice and the initiation of investigations into the role of parietal endoderm in placental function.