Constitutive heterochromatin at the pericentric regions of chromosomes undergoes dynamic changes in its epigenetic and spatial organization during spermatogenesis. Accurate control of pericentric heterochromatin is required for meiotic cell divisions and production of fertile and epigenetically intact spermatozoa. In this study, we demonstrate that pericentric heterochromatin is expressed during mouse spermatogenesis to produce major satellite repeat (MSR) transcripts. We show that the endonuclease DICER localizes to the pericentric heterochromatin in the testis. Furthermore, DICER forms complexes with MSR transcripts, and their processing into small RNAs is compromised in Dicer1 knockout mice leading to an elevated level of MSR transcripts in meiotic cells. We also show that defective MSR forward transcript processing in Dicer1 cKO germ cells is accompanied with reduced recruitment of SUV39H2 and H3K9me3 to the pericentric heterochromatin and meiotic chromosome missegregation. Altogether, our results indicate that the physiological role of DICER in maintenance of male fertility extends to the regulation of pericentric heterochromatin through direct targeting of MSR transcripts.