The mammalian TET enzymes catalyze DNA demethylation. While they have been intensely studied as major epigenetic regulators, little is known about their physiological roles and the extent of functional redundancy following embryo implantation. Here we define non-redundant roles for TET1 at an early postimplantation stage of the mouse embryo, when its paralogs Tet2 and Tet3 are not detectably expressed. TET1 regulates numerous genes defining differentiation programs in the epiblast and extraembryonic ectoderm. In epiblast cells, TET1 demethylates gene promoters via hydroxymethylation and maintains telomere stability. Surprisingly, TET1 represses a majority of epiblast target genes independently of methylation changes, in part through regulation of the gene encoding the transcriptional repressor JMJD8. Dysregulated gene expression in the absence of TET1 causes embryonic defects, which are partially penetrant in an inbred strain but fully lethal in non-inbred mice. Collectively, our study highlights an interplay between the catalytic and non-catalytic activities of TET1 that is essential for normal development.