RNA has been classically known to play central roles in biology, including maintaining telomeres, protein synthesis, and in sex chromosome compensation in certain species. At the center of these important biological systems are noncoding RNAs. While thousands of long noncoding RNAs (lncRNAs) have been identified in mammalian genomes, attributing RNA-based roles to lncRNA loci requires an assessment of whether the observed effect could be due to DNA regulatory elements, the act of transcription, or the lncRNA transcript. Here, we use the syntenically conserved lncRNA locus, Functional intergenic repeating RNA element (Firre), that is located on the X chromosome as a model to discriminate between DNA- and RNA-mediated effects in vivo. To this end, we generated genetically defined loss-of-function, gain-of-function, and rescue mouse models for Firre and provide genetic evidence that the Firre locus produces a trans-acting RNA. We report that: (i) Firre mutant mice have cell-specific defects during hematopoiesis and changes in gene expression that can be rescued by induction of Firre RNA from a transgene in the Firre knockout background, (ii) mice overexpressing Firre from a transgene exhibit increased levels of pro-inflammatory cytokines and impaired survival upon exposure to lipopolysaccharide, and (iii) deletion of the Firre locus did not result in changes in local gene expression on the X chromosome in 9 different biological contexts, suggesting that Firre does not function by cis-acting RNA or DNA elements. Together, our results provide genetic evidence that the Firre locus produces a trans-acting lncRNA that has physiological roles in hematopoiesis and immune function.