Villitis of unknown etiology (VUE) is an important pattern of placental injury occurring predominantly in term placentas. Although overlapping with infectious villitis, its clinical and histologic characteristics are distinct. It is a common lesion, affecting 5% to 15% of all placentas. When low-grade lesions affecting less than 10 villi per focus are excluded, VUE is an important cause of intrauterine growth restriction and recurrent reproductive loss. Involvement of large fetal vessels in the placenta (obliterative fetal vasculopathy) in cases of VUE is a strong risk factor for neonatal encephalopathy and cerebral palsy. Although the etiology of the eliciting antigen is unknown, many other characteristics of the immune response have been clarified. VUE is caused by maternal T lymphocytes, predominantly CD8-positive, that inappropriately gain access to the villous stroma. Fetal antigen-presenting cells (Hofbauer cells) expand and are induced to express class II major histocompatibility complex molecules. Maternal monocyte-macrophages in the perivillous space likely amplify the immune response. Although much speculation exists that VUE represents a host-versus-graft reaction analogous to transplant rejection, other eliciting antigens have not been excluded. Irrespective of target antigen or antigens, the pathophysiologic implications of having activated maternal lymphocytes within vascularized fetal tissues are not trivial.