Endogenous retroviruses (ERVs) are remnants of ancient parasitic infections and comprise sizable portions of most genomes. Although epigenetic mechanisms silence most ERVs by generating a repressive environment that prevents their expression (heterochromatin), little is known about mechanisms silencing ERVs residing in open regions of the genome (euchromatin). This is particularly important during embryonic development, where induction and repression of distinct classes of ERVs occur in short temporal windows. Here, we demonstrate that transcription-associated RNA degradation by the nuclear RNA exosome and Integrator is a regulatory mechanism that controls the productive transcription of most genes and many ERVs involved in preimplantation development. Disrupting nuclear RNA catabolism promotes dedifferentiation to a totipotent-like state characterized by defects in RNAPII elongation and decreased expression of long genes (gene-length asymmetry). Our results indicate that RNA catabolism is a core regulatory module of gene networks that safeguards RNAPII activity, ERV expression, cell identity, and developmental potency.