Vascular smooth muscle cells (SMCs) can transition between a quiescent contractile or "differentiated" phenotype and a "proliferative-dedifferentiated" phenotype in response to environmental cues, similar to what in occurs in the wound healing process observed in fibroblasts. When dysregulated, these processes contribute to the development of various lung and cardiovascular diseases such as Chronic Obstructive Pulmonary Disease (COPD). Long non-coding RNAs (lncRNAs) have emerged as key modulators of SMC differentiation and phenotypic changes. In this study, we examined the expression of lncRNAs in primary human pulmonary artery SMCs (hPASMCs) during cell-to-cell contact-induced SMC differentiation. We discovered a novel lncRNA, which we named Differentiation And Growth Arrest-Related lncRNA (DAGAR) that was significantly upregulated in the quiescent phenotype with respect to proliferative SMCs and in cell-cycle-arrested MRC5 lung fibroblasts. We demonstrated that DAGAR expression is essential for SMC quiescence and its knockdown hinders SMC differentiation. The treatment of quiescent SMCs with the pro-inflammatory cytokine Tumor Necrosis Factor (TNF), a known inducer of SMC dedifferentiation and proliferation, elicited DAGAR downregulation. Consistent with this, we observed diminished DAGAR expression in pulmonary arteries from COPD patients compared to non-smoker controls. Through pulldown experiments followed by mass spectrometry analysis, we identified several proteins that interact with DAGAR that are related to cell differentiation, the cell cycle, cytoskeleton organization, iron metabolism, and the N-6-Methyladenosine (m6A) machinery. In conclusion, our findings highlight DAGAR as a novel lncRNA that plays a crucial role in the regulation of cell proliferation and SMC differentiation. This paper underscores the potential significance of DAGAR in SMC and fibroblast physiology in health and disease.