Early mouse development is accompanied by dynamic changes in chromatin modifications, including G9a-mediated histone H3 lysine 9 dimethylation (H3K9me2), which is essential for embryonic development. Here we show that genome-wide accumulation of H3K9me2 is crucial for postimplantation development, and coincides with redistribution of enhancer of zeste homolog 2 (EZH2)-dependent histone H3 lysine 27 trimethylation (H3K27me3). Loss of G9a or EZH2 results in upregulation of distinct gene sets involved in cell cycle regulation, germline development and embryogenesis. Notably, the H3K9me2 modification extends to active enhancer elements where it promotes developmentally-linked gene silencing and directly marks promoters and gene bodies. This epigenetic mechanism is important for priming gene regulatory networks for critical cell fate decisions in rapidly proliferating postimplantation epiblast cells.