Mammalian oocyte quality reduces with age. We show that prior to the occurrence of significant aneuploidy (9M in mouse), heterochromatin histone marks are lost, and oocyte maturation is impaired. This loss occurs in both constitutive and facultative heterochromatin marks but not in euchromatic active marks. We show that heterochromatin loss with age also occurs in human prophase I‐arrested oocytes. Moreover, heterochromatin loss is accompanied in mouse oocytes by an increase in RNA processing and associated with an elevation in L1 and IAP retrotransposon expression and in DNA damage and DNA repair proteins nuclear localization. Artificial inhibition of the heterochromatin machinery in young oocytes causes an elevation in retrotransposon expression and oocyte maturation defects. Inhibiting retrotransposon reverse‐transcriptase through azidothymidine (AZT) treatment in older oocytes partially rescues their maturation defects and activity of the DNA repair machinery. Moreover, activating the heterochromatin machinery via treatment with the SIRT1 activating molecule SRT‐1720, or overexpression of Sirt1 or Ezh2 via plasmid electroporation into older oocytes causes an upregulation in constitutive heterochromatin, downregulation of retrotransposon expression, and elevated maturation rates. Collectively, our work demonstrates a significant process in oocyte aging, characterized by the loss of heterochromatin‐associated chromatin marks and activation of specific retrotransposons, which cause DNA damage and impair oocyte maturation.