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Upon mammalian fertilization, zygotic genome activation (ZGA) and activation of transposable elements (TEs) occur in early embryos to establish totipotency and support embryogenesis. However, the molecular mechanisms controlling the expression of these genes in mammals remain poorly understood. The 2-cell-like population of mouse embryonic stem cells (mESCs) mimics cleavage-stage embryos with transient Dux activation. In this study, we demonstrated that deficiency of the transcription factor OTX2 stimulates the expression of ZGA genes in mESCs. Further analysis revealed that OTX2 is incorporated at the Dux locus with corepressors for transcriptional inhibition. We also found that OTX2 associates with TEs and silences the subtypes of TEs. Therefore, OTX2 protein plays an important role in ZGA and TE expression in mESCs to orchestrate the transcriptional network.