We describe the discovery of sno-lncRNAs, a class of nuclear-enriched intron-derived long noncoding RNAs (lncRNAs) that are processed on both ends by the snoRNA machinery. During exonucleolytic trimming, the sequences between the snoRNAs are not degraded, leading to the accumulation of lncRNAs flanked by snoRNA sequences but lacking 5' caps and 3' poly(A) tails. Such RNAs are widely expressed in cells and tissues and can be produced by either box C/D or box H/ACA snoRNAs. Importantly, the genomic region encoding one abundant class of sno-lncRNAs (15q11-q13) is specifically deleted in Prader-Willi Syndrome (PWS). The PWS region sno-lncRNAs do not colocalize with nucleoli or Cajal bodies, but rather accumulate near their sites of synthesis. These sno-lncRNAs associate strongly with Fox family splicing regulators and alter patterns of splicing. These results thus implicate a previously unannotated class of lncRNAs in the molecular pathogenesis of PWS.