The differentiation of the stroma is a hallmark event during postnatal uterine development. However, the spatiotemporal changes that occur during this process and the underlying regulatory mechanisms remain elusive. Here, we comprehensively delineated the dynamic development of the neonatal uterus at single-cell resolution and characterized two distinct stromal subpopulations, inner and outer stroma. Furthermore, single-cell RNA sequencing revealed that uterine ablation of Pr-set7, the sole methyltransferase catalyzing H4K20me1, led to a reduced proportion of the inner stroma due to massive cell death, thus impeding uterine development. By combining RNA sequencing and epigenetic profiling of H4K20me1, we demonstrated that PR-SET7-H4K20me1 either directly repressed the transcription of interferon stimulated genes or indirectly restricted the interferon response via silencing endogenous retroviruses. Declined H4K20me1 level caused viral mimicry responses and ZBP1-mediated apoptosis and necroptosis in stromal cells. Collectively, our study provides insight into the epigenetic machinery governing postnatal uterine stromal development mediated by PR-SET7.