Nucleic acid-based systems play important roles in antiviral defense, including CRISPR/Cas that adopts RNA-guided DNA cleavage to prevent DNA phage infection and RNA interference (RNAi) that employs RNA-guided RNA cleavage to defend against RNA virus infection. Here, we report a novel type of nucleic acid-based antiviral system that exists in mouse embryonic stem cells (mESCs), which suppresses RNA virus infection by DNA-mediated RNA cleavage. We found that the viral RNA of encephalomyocarditis virus can be reverse transcribed into complementary DNA (vcDNA) by the reverse transcriptase (RTase) encoded by endogenous retrovirus-like elements in mESCs. The vcDNA is negative-sense single-stranded and forms DNA/RNA hybrid with viral RNA. The viral RNA in the heteroduplex is subsequently destroyed by cellular RNase H1, leading to robust suppression of viral growth. Furthermore, either inhibition of the RTase activity or depletion of endogenous RNase H1 results in the promotion of virus proliferation. Altogether, our results provide intriguing insights into the antiviral mechanism of mESCs and the antiviral function of endogenized retroviruses and cellular RNase H. Such a natural nucleic acid-based antiviral mechanism in mESCs is referred to as ERASE (endogenous RTase/RNase H-mediated antiviral system), which is an addition to the previously known nucleic acid-based antiviral mechanisms including CRISPR/Cas in bacteria and RNAi in plants and invertebrates.