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Precisely controlled gene regulatory networks are required during embryonic development to give rise to various structures, including those of the cardiovascular system. Long non-coding RNA (lncRNA) loci are known to be important regulators of these genetic programs. We have identified a novel and essential lncRNA locus Handsdown (Hdn), active in early heart cells, and show by genetic inactivation that it is essential for murine development. Hdn displays haploinsufficiency for cardiac development as Hdn-heterozygous adult mice exhibit hyperplasia in the right ventricular wall. Transcriptional activity of the Hdn locus, independent of its RNA, suppresses its neighboring gene Hand2. We reveal a switch in a topologically associated domain in differentiation of the cardiac lineage, allowing the Hdn locus to directly interact with regulatory elements of the Hand2 locus.