Endogenous retroviruses (ERVs) were usually silenced by various histone modifications on histone H3 variants and respective histone chaperones in embryonic stem cells (ESCs). However, it is still unknown whether chaperones of other histones could repress ERVs. Here, we show that H2A/H2B histone chaperone FACT plays a critical role in silencing ERVs and ERV-derived cryptic promoters in ESCs. Loss of FACT component Ssrp1 activated MERVL whereas the re-introduction of Ssrp1 rescued the phenotype. Additionally, Ssrp1 interacted with MERVL and suppressed cryptic transcription of MERVL-fused genes. Remarkably, Ssrp1 interacted with and recruited H2B deubiquitinase Usp7 to Ssrp1 target genes. Suppression of Usp7 caused similar phenotypes as loss of Ssrp1. Furthermore, Usp7 acted by deubiquitinating H2Bub and thereby repressed the expression of MERVL-fused genes. Taken together, our study uncovers a unique mechanism by which FACT complex silences ERVs and ERV-derived cryptic promoters in ESCs.