Long noncoding RNAs (lncRNAs) are involved in many aspects of cellular processes, including the antiviral immune response. To identify influenza A virus (IAV)-related lncRNAs, we performed RNA deep sequencing to compare the profiles of lncRNAs in A549 and HEK293T cells with or without IAV infection. We identified an IAV-upregulated lncRNA named lnc-ISG20 because it shares most of its sequence with ISG20. We found that lnc-ISG20 is an interferon-stimulated gene similar to ISG20. Overexpression of lnc-ISG20 inhibited IAV replication, while lnc-ISG20 knockdown favored viral replication, suggesting that lnc-ISG20 is inhibitory to IAV replication. Further study indicated that overexpression of lnc-ISG20 enhances ISG20 protein levels, while knockdown of lnc-ISG20 reduces ISG20 protein levels in A549 cells induced with poly(I·C) and Sendai virus. We demonstrated that lnc-ISG20 inhibits IAV replication in an ISG20-dependent manner. As lnc-ISG20 did not affect the mRNA level of ISG20, we postulated that lnc-ISG20 may function as endogenous RNA competing with ISG20 to enhance its translation. Indeed, we identified that microRNA 326 (miR-326) is a mutual microRNA for both ISG20 and lnc-ISG20 that targets the 3' untranslated region of ISG20 mRNA to inhibit its translation. We confirmed that lnc-ISG20 can bind miR-326, which in turn decreased the amount of miR-326 bound to ISG20 mRNA. In conclusion, we identified that the IAV-upregulated lnc-ISG20 is a novel interferon-stimulated gene that elicits its inhibitory effect on IAV replication by enhancing ISG20 expression. We demonstrated that lnc-ISG20 functions as a competitive endogenous RNA to bind miR-326 to reduce its inhibition of ISG20 translation. Our results revealed the mechanism by which lnc-ISG20 inhibits IAV replication. The replication of influenza A virus is regulated by host factors. However, the mechanisms by which lncRNAs regulate IAV infection are not well understood. We identified that lnc-ISG20 is upregulated during IAV infection and is also an interferon-stimulated gene. We demonstrated that lnc-ISG20 can enhance ISG20 expression, which in turn inhibits IAV replication. Our studies indicate that lnc-ISG20 functions as a competing endogenous RNA that binds miR-326 and reduces its inhibitory effect on ISG20. Taken together, our findings reveal the mechanistic details of lnc-ISG20 negatively regulating IAV replication. These findings indicate that lnc-ISG20 plays an important role during the host antiviral immune response.