We describe the case of a 31-week fetus who died in utero with an invasive retroperitoneal kaposiform hemangioendothelioma. This rare vascular neoplasm usually presents as a localized violaceous skin lesion in infants and behaves in a benign fashion; however, kaposiform hemangioendothelioma may present as an invasive neoplasm of the chest or abdominal cavity, where it can lead to the Kasabach-Merritt syndrome, which consists of thrombocytopenia, consumptive coagulopathy, and microangiopathic anemia in association with a vascular anomaly. The case we describe is unique in that the tumor presented in utero and led to intrauterine nonimmune fetal hydrops. Kaposiform hemangioendothelioma has been described in utero; however, to our knowledge, intrauterine fetal death as a direct consequence has not been reported previously in the literature.