The long terminal repeat (LTR) sequences of endogenous retroviruses and retroelements contain promoter elements and are known to form chimeric transcripts with nearby cellular genes. Here we show that an LTR of the THE1D retroelement family has been domesticated as an alternative promoter of human IL2RB, the gene encoding the beta subunit of the IL-2 receptor. The LTR promoter confers expression specifically in the placental trophoblast as opposed to its native transcription in the hematopoietic system. Rather than sequence-specific determinants, DNA methylation was found to regulate transcription initiation and splicing efficiency in a tissue-specific manner. Furthermore, we detected the cytoplasmic signaling domain of the IL-2Rbeta protein in the placenta, suggesting that IL-2Rbeta undergoes preferential proteolytic cleavage in this tissue. These findings implicate novel functions for this cytokine receptor subunit in the villous trophoblast and reveal an intriguing example of ancient LTR exaptation to drive tissue-specific gene expression.