Background: Endogenous retroviruses (ERVs), which are responsible for 10% of spontaneous mouse mutations, are kept under control via several epigenetic mechanisms. The H3K9 histone methyltransferase SETDB1 is essential for ERV repression in embryonic stem cells (ESCs), with DNA methylation also playing an important role. It has been suggested that SETDB1 protects ERVs from TET-dependent DNA demethylation, but the relevance of this mechanism for ERV expression remains unclear. Moreover, previous studies have been performed in primed ESCs, which are not epigenetically or transcriptionally representative of preimplantation embryos. Results: We used naïve ESCs to investigate the role of SETDB1 in ERV regulation and, in particular, its relationship with TET-mediated DNA demethylation. Naïve ESCs show an increased dependency on SETDB1 for ERV silencing when compared to primed ESCs, including at the highly mutagenic intracisternal A particles (IAPs). We found that, in the absence of SETDB1, TET2 activates IAP elements in a catalytic-dependent manner. Surprisingly, however, TET2 does not drive changes in DNA methylation levels at IAPs, suggesting that it regulates these transposons indirectly. Instead, SETDB1 depletion leads to a TET2-dependent loss of H4R3me2s, which is indispensable for IAP silencing during epigenetic reprogramming. Conclusions: Our results demonstrate a novel and unexpected role for SETDB1 in protecting IAPs from TET2-dependent histone arginine demethylation.