Abnormal placentation drives many pregnancy-related pathologies and poor fetal outcomes, but the underlying molecular causes are understudied. Here, we show that persistent replication stress due to mutations in the MCM2-7 replicative helicase disrupts placentation and reduces embryo viability in mice. MCM-deficient embryos exhibited normal morphology but their placentae had a drastically diminished junctional zone (JZ). Whereas cell proliferation in the labyrinth zone (LZ) remained unaffected, JZ cell proliferation was reduced during development. MCM2-7 deficient trophoblast stem cells (TSCs) failed to maintain stemness, suggesting that replication stress affects the initial trophoblast progenitor pool in a manner that preferentially impacts the developing JZ. In contrast, pluripotency of mouse embryonic stem cells with MCM2-7 deficiency were not affected. Developing female mice deficient for FANCM, a protein involved in replication-associated DNA repair, also had placentae with a diminished JZ. These findings indicate that replication stress-induced genomic instability compromises embryo outcomes by impairing placentation.