Long noncoding RNAs (lncRNAs) regulate diverse processes, yet a potential role for lncRNAs in maintaining the undifferentiated state in somatic tissue progenitor cells remains uncharacterized. We used transcriptome sequencing and tiling arrays to compare lncRNA expression in epidermal progenitor populations versus differentiating cells. We identified ANCR (anti-differentiation ncRNA) as an 855-base-pair lncRNA down-regulated during differentiation. Depleting ANCR in progenitor-containing populations, without any other stimuli, led to rapid differentiation gene induction. In epidermis, ANCR loss abolished the normal exclusion of differentiation from the progenitor-containing compartment. The ANCR lncRNA is thus required to enforce the undifferentiated cell state within epidermis.