Oxygen is a critical regulator of placentation. Early placental development occurs in a predominantly low oxygen environment and is, at least partially, under the control of hypoxia signaling pathways. In the present study, in vivo hypobaric hypoxia was used as an experimental tool to delineate hypoxia-sensitive events during placentation. Pregnant rats were exposed to the equivalent of 11% oxygen between days 6.5 and 13.5 of gestation. Pair-fed pregnant animals exposed to ambient conditions were included as a control group. Uterine mesometrial blood vessels in the hypoxia-exposed animals were greatly expanded and some contained large cuboidal cells that were positive for cytokeratin and other markers characteristic of invasive trophoblast cells. Unlike later in gestation, the route of trophoblast cell invasion in the hypoxia-exposed animals was restricted to endovascular, with no interstitial invasion observed. Hypoxia-activated endovascular trophoblast invasion required exposure to hypoxia from gestation day 8.5 to day 9.5. Activation of the invasive trophoblast lineage was also associated with an enlargement of the junctional zone of the chorioallantoic placenta, a source of invasive trophoblast cell progenitors. In summary, maternal hypoxia during early stages of placentation activates the invasive endovascular trophoblast cell lineage and promotes uterine vascular remodeling.