Long noncoding RNAs (lncRNAs) are increasingly recognized to play major regulatory roles in development and disease. To identify novel regulators in breast biology, we identified differentially regulated lncRNAs during mouse mammary development. Among the highest and most differentially expressed was a transcript (Zfas1) antisense to the 5' end of the protein-coding gene Znfx1. In vivo, Zfas1 RNA is localized within the ducts and alveoli of the mammary gland. Zfas1 intronically hosts three previously undescribed C/D box snoRNAs (SNORDs): Snord12, Snord12b, and Snord12c. In contrast to the general assumption that noncoding SNORD-host transcripts function only as vehicles to generate snoRNAs, knockdown of Zfas1 in a mammary epithelial cell line resulted in increased cellular proliferation and differentiation, while not substantially altering the levels of the SNORDs. In support of an independent function, we also found that Zfas1 is extremely stable, with a half-life >16 h. Expression analysis of the SNORDs revealed these were expressed at different levels, likely a result of distinct structures conferring differential stability. While there is relatively low primary sequence conservation between Zfas1 and its syntenic human ortholog ZFAS1, their predicted secondary structures have similar features. Like Zfas1, ZFAS1 is highly expressed in the mammary gland and is down-regulated in breast tumors compared to normal tissue. We propose a functional role for Zfas1/ ZFAS1 in the regulation of alveolar development and epithelial cell differentiation in the mammary gland, which, together with its dysregulation in human breast cancer, suggests ZFAS1 as a putative tumor suppressor gene.