The present case study reports about Placental mesenchymal dysplasia co-existing with high grade villitis of unknown aetiology (VUE). Placental Mesenchymal Dysplasia (PMD) is a rare placental lesion characterized by unusual abnormality of the stem villi of the placenta that could be mistaken for hydatidiform mole due to the presence of both cysts and normal-appearing parenchyma. A 30-year-old G2 P1 (full-term normal delivery) seen in fetal medicine clinic at 20 weeks within view of high risk on combined screening (low PAPP-A and high HCG). An ultrasound scan showed an appropriately grown baby with an abnormal placenta consisting of multiple lacunae more than 50% of the placental mass with increased thickness. A second opinion at tertiary care hospital confirmed the presence of prominent lakes on the placenta. Growth scans also showed IUGR with increasingly abnormal Doppler scans as the pregnancy progressed. At 35 weeks, EFW was < 3rd centile with static growth and patient had Induction of labour at 35 +4 weeks with vaginal delivery of a live male neonate weighing 2325g admitted to the neonatal intensive care unit (NICU) admission due to prematurity. The baby was discharged from NICU at day 5, achieving developmental milestones at the age of 23 weeks post-delivery. On microscopic histological examination, the chorionic plate showed no significant abnormality. The villous architecture was highly abnormal, and some villi were markedly enlarged with myxoid stroma and central degeneration. There were very occasional foci of apparent trophoblastic proliferation with villous architecture abnormalities seen in the form of clusters of large, immature intermediate villi. These features were in keeping with mesenchymal dysplasia. A highly unusual finding in this context was a florid infiltrate of CD3 positive T cells consistent with high-grade villitis of unknown aetiology concluding very rare co-existence of both conditions.