Domestication of transposable elements (TEs) into functional cis-regulatory elements is a widespread phenomenon. However, the mechanisms behind why some TEs are co-opted as functional enhancers while others are not are underappreciated. SINE-VNTR-Alus (SVAs) are the youngest group of transposons in the human genome, where ∼3,700 copies are annotated, nearly half of which are human-specific. Many studies indicate that SVAs are among the most frequently co-opted TEs in human gene regulation, but the mechanisms underlying such processes have not yet been thoroughly investigated. Here, we leveraged CRISPR-interference (CRISPRi), computational and functional genomics to elucidate the genomic features that underlie SVA domestication into human stem-cell gene regulation. We found that ∼750 SVAs are co-opted as functional cis-regulatory elements in human induced pluripotent stem cells. These SVAs are significantly closer to genes and harbor more transcription factor binding sites than non-co-opted SVAs. We show that a long DNA motif composed of flanking YY1/2 and OCT4 binding sites is enriched in the co-opted SVAs and that these two transcription factors bind consecutively on the TE sequence. We used CRISPRi to epigenetically repress active SVAs in stem cell-like NCCIT cells. Epigenetic perturbation of active SVAs strongly attenuated YY1/OCT4 binding and influenced neighboring gene expression. Ultimately, SVA repression resulted in ∼3,000 differentially expressed genes, 131 of which were the nearest gene to an annotated SVA. In summary, we demonstrated that SVAs modulate human gene expression, and uncovered that location and sequence composition contribute to SVA domestication into gene regulatory networks.