Pregnancy depends on the wholesale transformation of the endometrium, a process driven by differentiation of endometrial stromal cells (EnSC) into specialist decidual cells. Upon embryo implantation, decidual cells impart the tissue plasticity needed to accommodate a rapidly growing conceptus and invading placenta, although the underlying mechanisms are unclear. Here we characterize a discrete population of highly proliferative mesenchymal cells (hPMC) in midluteal human endometrium, coinciding with the window of embryo implantation. Single-cell transcriptomics demonstrated that hPMC express genes involved in chemotaxis and vascular transmigration. Although distinct from resident EnSC, hPMC also express genes encoding pivotal decidual transcription factors and markers, most prominently prolactin. We further show that hPMC are enriched around spiral arterioles, scattered throughout the stroma, and occasionally present in glandular and luminal epithelium. The abundance of hPMC correlated with the in vitro colony-forming unit activity of midluteal endometrium and, conversely, clonogenic cells in culture express a gene signature partially conserved in hPMC. Cross-referencing of single-cell RNA-sequencing data sets indicated that hPMC differentiate into a recently discovered decidual subpopulation in early pregnancy. Finally, we demonstrate that recurrent pregnancy loss is associated with hPMC depletion. Collectively, our findings characterize midluteal hPMC as novel decidual precursors that are likely derived from circulating bone marrow-derived mesenchymal stem/stromal cells and integral to decidual plasticity in pregnancy.