Eukaryotic RNA pol II transcripts are capped at the 5′ end by the methylated guanosine (m⁷G) moiety. In higher eukaryotes, CMTR1 and CMTR2 catalyze cap-proximal ribose methylations on the first (cap1) and second (cap2) nucleotides, respectively. These modifications mark RNAs as “self,” blocking the activation of the innate immune response pathway. Here, we show that loss of mouse Cmtr1 or Cmtr2 leads to embryonic lethality, with non-overlapping sets of transcripts being misregulated, but without activation of the interferon pathway. In contrast, Cmtr1 mutant adult mouse livers exhibit chronic activation of the interferon pathway, with multiple interferon-stimulated genes being expressed. Conditional deletion of Cmtr1 in the germline leads to infertility, while global translation is unaffected in the Cmtr1 mutant mouse liver and human cells. Thus, mammalian cap1 and cap2 modifications have essential roles in gene regulation beyond their role in helping cellular transcripts to evade the innate immune system.