During the development of placental animals, trophoblast stem (TS) cells differentiate into the multiple specialized cells of the placenta. Now, on p. 3393, Maltepe and colleagues show that crosstalk between hypoxia-inducible factor (HIF) and histone deacetylase (HDAC) determines placental stem cell fate in mice. TS cells normally differentiate in vitro into spongiotrophoblasts and trophoblast giant cells; however, TS cells null for Arnt, which encodes one of the two subunits of HIF1, differentiate instead into chorionic trophoblasts and syncytiotrophoblasts. HDAC activity is reduced in the Arnt-null TS cells, and given that HDAC inhibition mimics ARNT deletion, the researchers conclude that HIF-HDAC interactions regulate TS cell fate. HIFs, they suggest,modulate the developmental plasticity of TS cells, and possibly other stem cells, by integrating multiple epigenetic inputs, including oxygen tension and histone acetylation, with transcriptional regulatory mechanisms.