Many studies have highlighted the role of dysregulated glucagon secretion in the etiology of hyperglycemia and diabetes. Accordingly, understanding the mechanisms underlying pancreatic islet α cell development and function has important implications for the discovery of new therapies for diabetes. In this study, comparative transcriptome analyses between embryonic mouse pancreas and adult mouse islets identified several pancreatic lncRNAs that lie in close proximity to essential pancreatic transcription factors, including the Pax6-associated lncRNA Paupar. We demonstrate that Paupar is enriched in glucagon-producing α cells where it promotes the alternative splicing of Pax6 to an isoform required for activation of essential α cell genes. Consistently, deletion of Paupar in mice resulted in dysregulation of PAX6 α cell target genes and corresponding α cell dysfunction, including blunted glucagon secretion. These findings illustrate a distinct mechanism by which a pancreatic lncRNA can coordinate glucose homeostasis by cell-specific regulation of a broadly expressed transcription factor.