Liquid crystal elastomers realize a fascinating new form of soft matter that is a composite of a conventional crosslinked polymer gel (rubber) and a liquid crystal. These solid liquid crystal amalgams, quite similarly to their (conventional, fluid) liquid crystal counterparts, can spontaneously partially break translational and/or orientational symmetries, accompanied by novel soft Goldstone modes. As a consequence, these materials can exhibit unconventional elasticity characterized by symmetry-enforced vanishing of some elastic moduli. Thus, a proper description of such solids requires an essential modification of the classical elasticity theory. In this work, we develop a rotationally invariant, nonlinear theory of elasticity for the nematic phase of ideal liquid crystal elastomers. We show that it is characterized by soft modes, corresponding to a combination of long wavelength shear deformations of the solid network and rotations of the nematic director field. We study thermal fluctuations of these soft modes in the presence of network heterogeneities and show that they lead to a large variety of anomalous elastic properties, such as singular length-scale dependent shear elastic moduli, a divergent elastic constant for splay distortion of the nematic director, long-scale incompressibility, universal Poisson ratios and a nonlinear stress–strain relation for arbitrary small strains. These long-scale elastic properties are universal, controlled by a nontrivial zero-temperature fixed point and constitute a qualitative breakdown of the classical elasticity theory in nematic elastomers. Thus, nematic elastomers realize a stable “critical phase”, characterized by universal power-law correlations, akin to a critical point of a continuous phase transition, but extending over an entire phase.