LINE-1 (L1) retrotransposons are repetitive elements in mammalian genomes. They are capable of synthesizing DNA on their own RNA templates by harnessing reverse transcriptase (RT) that they encode. Abundantly expressed full-length L1s and their RT are found to globally influence gene expression profiles, differentiation state, and proliferation capacity of early embryos and many types of cancer, albeit by yet unknown mechanisms. They are essential for the progression of early development and the establishment of a cancer-related undifferentiated state. This raises important questions regarding the functional significance of L1 RT in these cell systems. Massive nuclear L1-linked reverse transcription has been shown to occur in mouse zygotes and two-cell embryos, and this phenomenon is purported to be DNA replication independent. This review argues against this claim with the goal of understanding the nature of this phenomenon and the role of L1 RT in early embryos and cancers. Available L1 data are revisited and integrated with relevant findings accumulated in the fields of replication timing, chromatin organization, and epigenetics, bringing together evidence that strongly supports two new concepts. First, noncanonical replication of a portion of genomic full-length L1s by means of L1 RNP-driven reverse transcription is proposed to co-exist with DNA polymerase-dependent replication of the rest of the genome during the same round of DNA replication in embryonic and cancer cell systems. Second, the role of this mechanism is thought to be epigenetic; it might promote transcriptional competence of neighboring genes linked to undifferentiated states through the prevention of tethering of involved L1s to the nuclear periphery. From the standpoint of these concepts, several hitherto inexplicable phenomena can be explained. Testing methods for the model are proposed.