Long noncoding RNAs are emerging players in the epigenetic machinery with key roles in development and diseases. Here we uncover a complex network comprising a promoter-associated noncoding RNA (paRNA), microRNA and epigenetic regulators that controls transcription of the tumour suppressor E-cadherin in epithelial cancers. E-cadherin silencing relies on the formation of a complex between the paRNA and microRNA-guided Argonaute 1 that, together, recruit SUV39H1 and induce repressive chromatin modifications in the gene promoter. A single nucleotide polymorphism (rs16260) linked to increased cancer risk alters the secondary structure of the paRNA, with the risk allele facilitating the assembly of the microRNA-guided Argonaute 1 complex and gene silencing. Collectively, these data demonstrate the role of a paRNA in E-cadherin regulation and the impact of a noncoding genetic variant on its function. Deregulation of paRNA-based epigenetic networks may contribute to cancer and other diseases making them promising targets for drug discovery.