The innate RNA sensor RIG-I is critical in the initiation of antiviral type I interferons (IFNs) production upon recognition of “non-self” viral RNAs. Here, we identify a host-derived, IFN-inducible long noncoding RNA, lnc-Lsm3b, that can compete with viral RNAs in the binding of RIG-I monomers and feedback inactivate the RIG-I innate function at late stage of innate response. Mechanistically, binding of lnc-Lsm3b restricts RIG-I protein's conformational shift and prevents downstream signaling, thereby terminating type I IFNs production. Multivalent structural motifs and long-stem structure are critical features of lnc-Lsm3b for RIG-I binding and inhibition. These data reveal a non-canonical self-recognition mode in the regulation of immune response and demonstrate an important role of an inducible “self” lncRNA acting as a potent molecular decoy actively saturating RIG-I binding sites to restrict the duration of “non-self” RNA-induced innate immune response and maintaining immune homeostasis, with potential utility in inflammatory disease management. A self-recognition mode between RIG-I and an inducible host lncRNA functions to restrict innate immune response in a feedback manner.