The histone H3 lysine 9 methyltransferase SETDB1 controls transcriptional repression to direct stem cell fate. Here, we show that Setdb1 expression by adult muscle stem cells (MuSCs) is required for skeletal muscle regeneration. We find that SETDB1 represses the expression of endogenous retroviruses (ERVs) in MuSCs. ERV de-repression in Setdb1-null MuSCs prevents their amplification following exit from quiescence and promotes cell death. Multi-omics profiling shows that chromatin decompaction at ERV loci activates the DNA-sensing cGAS-STING pathway, entailing cytokine expression by Setdb1-null MuSCs. This is followed by aberrant infiltration of inflammatory cells, including pathological macrophages. The ensuing histiocytosis is accompanied by myofiber necrosis, which, in addition to progressive MuSCs depletion, completely abolishes tissue repair. In contrast, loss of Setdb1 in fibro-adipogenic progenitors (FAPs) does not impact immune cells. In conclusion, genome maintenance by SETDB1 in an adult somatic stem cell is necessary for both its regenerative potential and adequate reparative inflammation.