The genetic mechanisms underlying the expansion in size and complexity of the human brain remain poorly understood. Long interspersed nuclear element–1 (L1) retrotransposons are a source of divergent genetic information in hominoid genomes, but their importance in physiological functions and their contribution to human brain evolution are largely unknown. Using multiomics profiling, we here demonstrate that L1 promoters are dynamically active in the developing and the adult human brain. L1s generate hundreds of developmentally regulated and cell type–specific transcripts, many that are co-opted as chimeric transcripts or regulatory RNAs. One L1-derived long noncoding RNA,
LINC01876
, is a human-specific transcript expressed exclusively during brain development. CRISPR interference silencing of
LINC01876
results in reduced size of cerebral organoids and premature differentiation of neural progenitors, implicating L1s in human-specific developmental processes. In summary, our results demonstrate that L1-derived transcripts provide a previously undescribed layer of primate- and human-specific transcriptome complexity that contributes to the functional diversification of the human brain.