Mammalian pericentromeric DNA satellite repeats generate long noncoding RNAs (lncRNAs) that are linked to genomic instability and carcinogenesis. Pericentromeric lncRNAs are aberrantly expressed in human epithelial cancers and mouse cancer models. The overexpression of these transcripts induces cell cycle defects, chromosome mis-segregation, DNA damage, and genomic instability. Therefore, although pericentromeric RNAs are considered etiological factors in carcinogenesis, the mechanisms underlying their regulation remain unclear. The RNA interference (RNAi) pathway functions in the transcriptional repression of DNA satellite repeats at pericentromeres to ensure genomic stability in a variety of eukaryotic model systems. However, it remains controversial if this regulation occurs in mammalian systems. Here, we show that in mouse embryonic stem cells (mESCs) and adult mesenchymal stem cells (mMSCs) pericentromeric lncRNAs are transcriptionally and post-transcriptionally repressed by a Dicer-dependent and Ago-mediated mechanism. We determine that bidirectional pericentromeric transcription generates autoregulatory pericentromeric small RNA that are specified by a small hairpin on the reverse transcript, and are ultimately generated through Dicer processing. We show that pericentromeric lncRNAs are expressed during S-phase. These lncRNAs are chromatin-enriched, not polyadenylated or 7-methylguanosine capped, and contain a variable number of satellite repeats. Additionally, we determine that depletion of Ago-mediated regulation of the pericentromeric lncRNAs leads to cell cycle progression defects and a defective spindle assembly checkpoint (SAC).