Fusion of cytotrophoblasts into the multinucleated syncytiotrophoblast layer is essential for the development of a functional placenta. The envelope protein of a human endogenous retrovirus W (HERV-W) family member, syncytin 1, has been shown to mediate placental cell fusion. Recently, the envelope protein of another HERV family member (HERV-FRD), syncytin 2, has been identified and shown to be highly expressed in the placenta. To better understand the biology of syncytin 2, in this study we first investigated syncytin 2 gene expression in normal and preeclamptic placentas and then characterized the functions of syncytin 2. The expression of syncytin 2 gene was decreased in preeclamptic placentas and could be stimulated by the cAMP stimulant forskolin. The endoprotease furin was found to be involved in the posttranslational cleavage of syncytin 1 and 2 polypeptides into surface and transmembrane subunits. In addition, proper association of the subunits of syncytins 1 and 2 is probably required for the functional integrity of each protein, because subunit swapping of syncytins 1 and 2 failed to generate fusogenic chimeras. Finally, we demonstrated that the disulfide bridge-forming CX₂C and CX₇C motifs found in syncytins 1 and 2 are essential for their fusogenic activities, because mutations in the CX₂C motif not only abolished fusogenesis but also functioned as dominant-negative mutants. Our results suggest that syncytin 2 may function as a second fusogenic protein for placental cell fusion..