Many repetitive DNA elements are packaged in heterochromatin, but depend on occasional transcription to maintain long-term silencing. The factors that promote transcription of repeat elements in heterochromatin are largely unknown. Here, we show that DOT1L, a histone methyltransferase that modifies lysine 79 of histone H3 (H3K79), is required for transcription of major satellite repeats to maintain pericentromeric heterochromatin (PCH), and that this function is essential for preimplantation development. DOT1L is a transcriptional activator at single-copy genes but does not have a known role in repeat element transcription. We show that H3K79me3 is specifically enriched at repetitive elements, that loss of DOT1L compromises pericentromeric major satellite transcription, and that this function depends on interaction between DOT1L and the chromatin remodeler SMARCA5. DOT1L inhibition causes chromosome breaks and cell cycle defects, and leads to embryonic lethality. Together, our findings uncover a vital new role for DOT1L in transcriptional activation of heterochromatic repeats.