The mammalian placenta consists of different trophoblast cell types that assist in the variety of functions required for the maintenance of pregnancy. In rodents, labyrinthine trophoblasts of the placenta are especially important, because they are capable of differentiating into fused labyrinthine cells, which form the feto–maternal exchange surface. Even though the molecular signals triggering labyrinthine trophoblast differentiation are poorly understood, transforming growth factor-β (TGF-β) has been shown to be present in the placental environment and alter trophoblast development. In this study, we investigated the effects of TGF-β on the differentiation of the labyrinthine trophoblast stem cell lines SM10 and HRP-1. RT-PCR analyses demonstrated that while the molecular expression of labyrinthine-specific lineage markers (Esx1, Tfeb, and Tec) was maintained in TGF-β-treated SM10 and HRP-1 cells, TGF-β induced the down-regulation of trophoblast stem cell markers Id2 and Cdx2. In contrast, TGF-β induced the expression of a marker of differentiated labyrinthine trophoblasts, Gcm1, only in the SM10 cell line. Furthermore, we demonstrated an increased glucose uptake in the TGF-β-treated SM10 cells, indicative of functional differentiation. Finally, cell fusion in TGF-β-treated SM10 and HRP-1 cells was investigated by western blotting analysis of placental alkaline phosphatase and cadherin-11 and by microscopic analyses of cell morphology using green fluorescent protein (GFP) and rhodamine phalloidin staining. The western blotting and morphological analyses indicate TGF-β-induced cell fusion and morphological differentiation in the SM10 cell line. The SM10 cell line will provide a new and unique model for detailed analysis of TGF-β-induced molecular events associated with labyrinthine trophoblast differentiation and function.