Inadequate invasion of the uterus by cytotrophoblasts is speculated to result in pregnancy-induced disorders such as preeclampsia. However, the molecular mechanisms that govern appropriate invasion of cytotrophoblasts are unknown. Here, we demonstrate that under low-oxygen conditions (2.5% oxygen), 2-methoxyestradiol (2-ME), which is a metabolite of estradiol and is generated by catechol-o-methyltransferase (COMT), induces invasion of cytotrophoblasts into a naturally-derived, extracellular matrix. Neither low-oxygen conditions nor 2-ME alone induces the invasion of cytotrophoblasts in this system; however, low-oxygen conditions combined with 2-ME result in the appropriate invasion of cytotrophoblasts into the extracellular matrix. Cytotrophoblast invasion under these conditions is also associated with a decrease in the expression of hypoxia-inducible factor-1alpha (HIF-1alpha), transforming growth factor-beta3 (TGF-beta3), and tissue inhibitor of metalloproteinases-2 (TIMP-2). Pregnant COMT-deficient mice with hypoxic placentas and preeclampsia-like features demonstrate an up-regulation of HIF-1alpha, TGF-beta3, and TIMP-2 when compared with wild-type mice; normal levels are restored on administration of 2-ME, which also results in the resolution of preeclampsia-like features in these mice. Indeed, placentas from patients with preeclampsia reveal lower levels of COMT and higher levels of HIF-1alpha, TGF-beta3, and TIMP-2 when compared with those from normal pregnant women. We demonstrate that low-oxygen conditions of the placenta are a critical co-stimulator along with 2-ME for the proper invasion of cytotrophoblasts to facilitate appropriate vascular development and oxygenation during pregnancy.