Exploration and dissection of potential actions and effects of long noncoding RNA (lncRNA) in animals remain challenging. Here, using multiple knockout mouse models and single cell RNA sequencing, we demonstrate that the divergent lncRNA Hand2os1/Uph has a key complex modulatory effect on the expression of its neighboring gene HAND2 and subsequently on heart development and function. Short deletion of the Hand2os1 promoter in mouse diminishes Hand2os1 transcription to ∼8-32%, but fails to affect HAND2 expression and yields no discernable heart phenotypes. Interestingly, full-length deletion of Hand2os1 in mouse causes moderate yet prevalent upregulation of HAND2 in hundreds of cardiac cells, leading to profound biological consequences, including dysregulated cardiac gene programs, congenital heart defects and perinatal lethality. We propose that the Hand2os1 locus dampens HAND2 expression to restrain cardiomyocyte proliferation, thereby orchestrating a balanced development of cardiac cell lineages. This study highlights the regulatory complexity of the lncRNA Hand2os1 on HAND2 expression, emphasizing the need for complementary genetic and single cell approaches to delineate the function and primary molecular effects of an lncRNA in animals.