The role of long non-coding RNAs (lncRNAs) in early mammalian embryogenesis remains unclear due to the complexity of the regulatory mechanisms involving lncRNAs and the limited availability of embryo samples. Stem cell-based models, such as mouse gastruloids, provide new ways to address these challenges. Here, we investigate the function of ultra-conserved lncRNA T-UCstem1 in mammalian body plan formation. Combining morphological and immunofluorescence imaging analyses with bulk and single-cell transcriptomics, we provide evidence indicating that T-UCstem1 is important for mouse gastruloid development and anteroposterior axis extension. T-UCstem1 depletion in gastruloids results in their aberrant development, with defects in the expression of differentiation markers and persistence of pluripotency gene expression. Our single-cell analyses reveal higher levels of cellular heterogeneity in T-UCstem1-knockdown gastruloids. The presence of cell populations co-expressing pluripotency and differentiation markers points to an important role of T-UCstem1 in the establishment and maintenance of cell identity. Mechanistically, we show that T-UCstem1 acts in a non-cell-autonomous manner through regulation of the Dickkopf-related protein 1 (DKK1)-dependent WNT pathway. Our study identifies a new role for an ultra-conserved lncRNA in gastruloid development and highlights gastruloids as a model system for studying lncRNAs in early development.