Mammals have three HP1 protein isotypes HP1𝛽 (CBX1), HP1𝛾 (CBX3) and HP1𝛼 (CBX5) that are encoded by the corresponding genes Cbx1, Cbx3 and Cbx5. Recent work has shown that reduction of CBX3 protein in homozygotes for a hypomorphic allele (Cbx3hypo) causes a severe postnatal mortality with around 99% of the homozygotes dying before weaning. It is not known what the causes of the postnatal mortality are. Here we show that Cbx3hypo/hypo conceptuses are significantly reduced in size and the placentas exhibit a haplo-insufficiency. Late gestation Cbx3hypo/hypo placentas have reduced mRNA transcripts for genes involved in growth regulation, amino acid and glucose transport. Blood vessels within the Cbx3hypo/hypo placental labyrinth are narrower than wild-type. Newborn Cbx3hypo/hypo pups are hypoglycemic, the livers are depleted of glycogen reserves and there is almost complete loss of stored lipid in brown adipose tissue (BAT). There is a 10-fold reduction in expression of the BAT-specific Ucp1 gene, whose product is responsible for non-shivering themogenesis. We suggest that it is the small size of the Cbx3hypo/hypo neonates, a likely consequence of placental growth and transport defects, combined with a possible inability to thermoregulate that causes the severe postnatal mortality.