Cellular quiescence and cell cycle reentry regulate vital biological processes such as cellular development and tissue homeostasis and are controlled by precise regulation of gene expression. The roles of long noncoding RNAs (lncRNAs) during these processes remain to be elucidated. By performing genome-wide transcriptome analyses, we identify differential expression of several hundreds of lncRNAs, including a significant number of the less-characterized class of microRNA-host-gene (MIRHG) lncRNAs or lnc-MIRHGs, during cellular quiescence and cell cycle reentry in human diploid fibroblasts. We observe that MIR222HG lncRNA displays serum-stimulated RNA processing due to enhanced splicing of the host nascent pri-MIR222HG transcript. The pre-mRNA splicing factor SRSF1 negatively regulates the microprocessor-catalyzed cleavage of pri-miR-222, thereby increasing the cellular pool of the mature MIR222HG. Association of SRSF1 to pri-MIR222HG, including to a mini-exon, which partially overlaps with the primary miR-222 precursor, promotes serum-stimulated splicing over microRNA processing of MIR222HG. Further, we observe that the increased levels of spliced MIR222HG in serum-stimulated cells promote the cell cycle reentry post quiescence in a microRNA-independent manner. MIR222HG interacts with DNM3OS, another lncRNA whose expression is elevated upon serum-stimulation, and promotes cell cycle reentry. The double-stranded RNA binding protein ILF3/2 complex facilitates MIR222HG:DNM3OS RNP complex assembly, thereby promoting DNM3OS RNA stability. Our study identifies a novel mechanism whereby competition between the splicing and microprocessor machinery modulates the serum-induced RNA processing of MIR222HG, which dictates cell cycle reentry.