Mammalian genomes are a battleground for genetic conflict between repetitive elements and KRAB-zinc finger proteins (KZFPs). We asked whether KZFPs can regulate cell fate by using ZFP819, which targets a satellite DNA array, ZP3AR. ZP3AR coats megabase regions of chromosome 7 encompassing genes encoding ZSCAN4, a master transcription factor of totipotency. Depleting ZFP819 in mouse embryonic stem cells (mESCs) causes them to transition to a 2-cell (2C)-like state, whereby the ZP3AR array switches from a poised to an active enhancer state. This is accompanied by a global erosion of heterochromatin roadblocks, which we link to decreased SETDB1 stability. These events result in transcription of active LINE-1 elements and impaired differentiation. In summary, ZFP819 and TRIM28 partner up to close chromatin across Zscan4, to promote exit from totipotency. We propose that satellite DNAs may control developmental fate transitions by barcoding and switching off master transcription factor genes.