Reproduction in eutherian mammals is characterized by extended intrauterine retention of the fetus after implantation. We summarize evolutionary innovations that enable this form of vivipary, including early maternal recognition of pregnancy, invasive placentation, and emergence of the decidual cell type. We first review the structure of the marsupial endometrium and its relationship to that of eutherian mammals. While the tissue components of endometrium are the same in marsupials and eutherians, an important difference is the amount of stromal cells, which are much more abundant in eutherians. Moreover, the nature of the invasive placentation differs in marsupials and eutherians. In the opossum, it consists of cytoplasmatic extensions of trophoblast cells that penetrate between the luminal epithelial cells to contact maternal capillaries. In bandicoots, the trophoblast and luminal epithelial cells fuse, and the maternal epithelium is replaced by a layer of multinucleated cells. In no case has there been evidence of a direct interaction between trophoblast and stromal cells. The direct interface between the trophoblast and maternal stroma is a derived feature of eutherian mammals, coincidental with the origin of decidual cells. Gene expression studies are suggestive of "categorical reprograming" of endometrial fibroblasts during decidualization. This reprogramming suggests that the decidual cell is a distinct cell type rather than a modulation of endometrial fibroblasts. Further support for this hypothesis is the origin of derived transcription factor interactions that are necessary for the regulation of decidual gene expression, in particular the interactions between HOXA11 and CEBPB with FOXO1A.