Immunotherapy has become established as major treatment modality for multiple types of solid tumors, including colorectal cancer. Identifying novel immunotherapeutic targets to enhance anti-tumor immunity and sensitize current immune checkpoint blockade (ICB) in colorectal cancer is needed. Here we report the histone demethylase PHD finger protein 8 (PHF8, KDM7B), a Jumonji C domain-containing protein that erases repressive histone methyl marks, as an essential mediator of immune escape. Ablation the function of PHF8 abrogates tumor growth, activates anti-tumor immune memory, and augments sensitivity to ICB therapy in mouse models of colorectal cancer. Strikingly, tumor PHF8 deletion stimulates a viral mimicry response in colorectal cancer cells, where the depletion of key components of endogenous nucleic acid sensing diminishes PHF8 loss-meditated antiviral immune responses and anti-tumor effects in vivo. Mechanistically, PHF8 inhibition elicits H3K9me3-dependent retrotransposon activation by promoting proteasomal degradation of the H3K9 methyltransferase SETDB1 in a demethylase-independent manner. Moreover, PHF8 expression is anti-correlated with canonical immune signatures and antiviral immune responses in human colorectal adenocarcinoma. Overall, our study establishes PHF8 as an epigenetic checkpoint, and targeting PHF8 is a promising viral mimicry-inducing approach to enhance intrinsic anti-tumor immunity or to conquer immune resistance.