Envelope glycoproteins of human endogenous retrovirus (HERV), such as syncytin 1 (HERV-W), are highly expressed in the placenta and some family members have immunomodulatory properties. Placental microvesicles (MV), which are shed into the maternal circulation during pregnancy, have been demonstrated to induce immune cell activation. Therefore, the aim of this study was to investigate the immunological properties of the highly expressed placental HERV-W protein, syncytin 1, and its potential involvement in placental MV modulation of immune cell activity. The MV shed from first trimester, normal term and pre-eclamptic term placentas, and from the BeWo trophoblast cell line, all contain syncytin 1. Recombinant syncytin 1 and syncytin 1-positive BeWo trophoblast MV both induced peripheral blood mononuclear cell (PBMC) activation, indicated through production of cytokines and chemokines. Reducing syncytin 1 content in BeWo MV inhibited PBMC activation. Recombinant syncytin 1 and syncytin-1-positive BeWo MV dampened PBMC responses to lipopolysaccharide challenge. Our findings suggest that syncytin 1 is shed from the placenta into the maternal circulation in association with MV, and modulates immune cell activation and the responses of immune cells to subsequent lipopolysaccharide stimulation. These studies implicate placental MV-associated HERV in fetal regulation of the maternal immune system. © 2012 The Authors. Immunology © 2012 Blackwell Publishing Ltd.