Tfeb is a member of the basic Helix-Loop-Helix-Zipper family of transcription factors. In vitro studies have shown that TFEB can bind DNA as a homodimer or as a heterodimer with three closely related family members: MITF, TFE3 and TFEC. While mutations of Mitf have been shown to affect the development of a number of cell types including melanocytes, osteoclasts, and masts cells, little is known about the phenotypic consequences of mutations at Tfe3, Tfeb and Tfec. Here we show that mice with a targeted disruption of Tfeb die between 9.5 and 10.5 days in embryonic development and have severe defects in placental vascularization. Tfeb is expressed at low levels in the embryo but at high levels in the labyrinthine trophoblast cells of the placenta. While labyrinthine cells are present in the mutant Tfeb placenta, they fail to express VEGF, a potent mitogen required for normal vasculogenesis of the embryo and extraembryonic tissues. In Tfeb mutant embryos the embryonic vasculature forms normally but few vessels are seen entering the placenta and those that do enter fail to thrive and branch normally. Our results indicate that Tfeb plays a critical role in the signal transduction processes required for normal vascularization of the placenta.