In eutherian mammals, females have two X chromosomes and males have one. X chromosome inactivation (XCI) is a dosage compensation mechanism to silence genes on one of two X chromosomes in females, equalizing gene expression between the sexes. XCI is orchestrated by the long non-coding RNA Xist, which recruits repressive proteins via its repeat sequence elements. We deleted the B repeat of Xist, which is responsible for heterochromatinization of the inactive X chromosome (Xi), in 129SvJae mice. We found that ∆B-Xist is chosen as often as wildtype (WT) Xist to form an Xi, but over 50% of genes increase expression on the ∆B-Xi compared to the WT-Xi. XCI is paternally imprinted in the placenta. Paternally transmitted ∆B-Xist causes female-specific growth restriction and in utero lethality. Mid-gestation ∆B-Xist placentas have a reduced junctional zone (JZ) between the labyrinth and maternal decidua. The JZ is made from fetal cells, directly interfaces with the maternal component of the placenta, and originates the cells that invade into and remodel maternal uterine arteries. JZ expansion occurs in cloned embryos silencing all X chromosomes via dysregulated Xist expression, the opposite phenotype to our ∆B-Xist placentas, suggesting that X-linked gene dosage regulates JZ size. Intriguingly, interspecies hybrid female placentas show X-linked JZ expansion and reduction depending on which species’ X chromosome is silenced, suggesting that interspecies breeding causes over- and under-expression of X-linked genes in reciprocal crosses. As the Xi silences, the active X chromosome (Xa) increases expression in process known as X chromosome upregulation. Based on these data, we hypothesize that each mouse species evolved a unique balance of Xi-repression and Xa-upregulation. Our work provides a novel perspective on balancing gene expression from active and inactive X chromosomes, and insight into the role of X-linked dosage compensation in placental development, disease, and evolution.