Vascular smooth muscle cell (VSMC) plasticity is fundamental in uterine spiral artery remodeling during placentation in Eutherian mammals. Our previous work showed that the invasion of trophoblast cells into uterine myometrium coincides with a phenotypic change of VSMCs. Here, we elucidate the mechanism by which trophoblast cells confer VSMC plasticity. Analysis of genetic markers on E13.5, E16.5, and E19.5 in the rat metrial gland, the entry point of uterine arteries, revealed that trophoblast invasion is associated with downregulation of MYOCARDIN, α‐smooth muscle actin, and calponin1, and concomitant upregulation of Smemb in VSMCs. Myocardin overexpression or knockdown in VSMCs led to upregulation or downregulation of contractile markers, respectively. Co‐culture of trophoblast cells with VSMCs decreased MYOCARDIN expression along with compromised expression of contractile markers in VSMCs. However, co‐culture of trophoblast cells with VSMCs overexpressing MYOCARDIN inhibited their change in phenotype, whereas, overexpression of transactivation domain deleted MYOCARDIN failed to elicit this response. Furthermore, the co‐culture of trophoblast cells with VSMCs led to the activation of NFκβ signaling. Interestingly, despite producing IL‐1β, trophoblast cells possess only the decoy receptor, whereas, VSMCs possess the IL‐1β signaling receptor. Treatment of VSMCs with exogenous IL‐1β led to a decrease in MYOCARDIN and an increase in phosphorylation of NFκβ. The effect of trophoblast cells in the downregulation of MYOCARDIN in VSMCs was reversed by blocking NFκβ translocation to the nucleus. Together, these data highlight that trophoblast cells direct VSMC plasticity, and trophoblast‐derived IL‐1β is a key player in downregulating MYOCARDIN via the NFκβ signaling pathway.