Bladder cancer affects over half a million people worldwide each year. Recent advances in early detection allowed a successful management of non-aggressive cancers, yet the recurrence rate remains high. Aggressive muscle-invasive bladder tumours are life-threatening and challenging to cure. Therefore, understanding of key molecular pathways involved in cancer progression is critical for developing of new personalised targeted therapies. Recently, non-coding RNAs (ncRNAs) have emerged as key regulators orchestrating complex biological processes in cancer, yet their function is not fully understood. Here, we compare non-muscle invasive and muscle invasive cell lines and identify a ncRNA gene MIR205HG and its transcript LEADR among the top ncRNAs downregulated in muscle invasive urothelial tumours. We show that LEADR expression is epigenetically regulated by master transcription factor p63. LEADR is localised in the nuclei of non-muscle invasive bladder cancer cells where it dampens hyperactivation of interferon stimulated genes possibly increasing sensitivity of bladder cancer cells to interferon signalling. These findings uncover an anti-tumoral role of non-coding RNA LEADR in mediating immune response in bladder cancer.