Alterations in genetic programs required for terminal myeloid differentiation and aberrant proliferation characterize acute myeloid leukemia (AML) cells. Here, we identify the host transcript of miR-223, linc-223, as a novel functional long non-coding RNA (lncRNA) in AML. We show that from the primary nuclear transcript, the alternative production of miR-223 and linc-223 is finely regulated during monocytic differentiation. Moreover, linc-223 expression inhibits cell cycle progression and promotes monocytic differentiation of AML cells. We also demonstrate that endogenous linc-223 localizes in the cytoplasm and acts as a competing endogenous RNA for miR-125-5p, an oncogenic microRNA in leukemia. In particular, we show that linc-223 directly binds to miR-125-5p and that its knockdown increases the repressing activity of miR-125-5p resulting in the downregulation of its target interferon regulatory factor 4 (IRF4), which it was previously shown to inhibit the oncogenic activity of miR-125-5p in vivo. Furthermore, data from primary AML samples show significant downregulation of linc-223 in different AML subtypes. Therein, these findings indicate that the newly identified lncRNA linc-223 may have an important role in myeloid differentiation and leukemogenesis, at least in part, by cross-talking with IRF4 mRNA.