Trimethylation of histone H3 lysine 9 (H3K9me3) is crucial for the regulation of gene repression and heterochromatin formation, cell-fate determination and organismal development1. H3K9me3 also provides an essential mechanism for silencing transposable elements1-4. However, previous studies have shown that canonical H3K9me3 readers (for example, HP1 (refs. 5-9) and MPP8 (refs. 10-12)) have limited roles in silencing endogenous retroviruses (ERVs), one of the main transposable element classes in the mammalian genome13. Here we report that trinucleotide-repeat-containing 18 (TNRC18), a poorly understood chromatin regulator, recognizes H3K9me3 to mediate the silencing of ERV class I (ERV1) elements such as LTR12 (ref. 14). Biochemical, biophysical and structural studies identified the carboxy-terminal bromo-adjacent homology (BAH) domain of TNRC18 (TNRC18(BAH)) as an H3K9me3-specific reader. Moreover, the amino-terminal segment of TNRC18 is a platform for the direct recruitment of co-repressors such as HDAC-Sin3-NCoR complexes, thus enforcing optimal repression of the H3K9me3-demarcated ERVs. Point mutagenesis that disrupts the TNRC18(BAH)-mediated H3K9me3 engagement caused neonatal death in mice and, in multiple mammalian cell models, led to derepressed expression of ERVs, which affected the landscape of cis-regulatory elements and, therefore, gene-expression programmes. Collectively, we describe a new H3K9me3-sensing and regulatory pathway that operates to epigenetically silence evolutionarily young ERVs and exert substantial effects on host genome integrity, transcriptomic regulation, immunity and development.