Mouse embryos acquire global DNA methylation of their genome during implantation. However the exact roles of DNA methyltransferases (DNMTs) in embryos have not been studied comprehensively. Here we systematically analyze the consequences of genetic inactivation of Dnmt1, Dnmt3a and Dnmt3b on the methylome and transcriptome of mouse embryos. We find a strict division of function between DNMT1, responsible for maintenance methylation, and DNMT3A/B, solely responsible for methylation acquisition in development. By analyzing severely hypomethylated embryos, we uncover multiple functions of DNA methylation that is used as a mechanism of repression for a panel of genes including not only imprinted and germline genes, but also lineage-committed genes and 2-cell genes. DNA methylation also suppresses multiple retrotransposons and illegitimate transcripts from cryptic promoters in transposons and gene bodies. Our work provides a thorough analysis of the roles of DNA methyltransferases and the importance of DNA methylation for transcriptome integrity in mammalian embryos.