X chromosome inactivation (XCI) is an essential epigenetic process which involves several non-coding RNAs (ncRNAs), including Xist, the master regulator of X-inactivation initiation. Xist is flanked in its 5' region by a large heterochromatic hotspot, which contains several transcription units including a gene of unknown function, Ftx (five prime to Xist). In this article, we describe the characterization and functional analysis of murine Ftx. We present evidence that Ftx produces a conserved functional long ncRNA, and additionally hosts microRNAs (miR) in its introns. Strikingly, Ftx partially escapes X-inactivation and is upregulated specifically in female ES cells at the onset of X-inactivation, an expression profile which closely follows that of Xist. We generated Ftx null ES cells to address the function of this gene. In these cells, only local changes in chromatin marks are detected within the hotspot, indicating that Ftx is not involved in the global maintenance of the heterochromatic structure of this region. The Ftx mutation, however, results in widespread alteration of transcript levels within the X-inactivation center (Xic) and particularly important decreases in Xist RNA levels, which were correlated with increased DNA methylation at the Xist CpG island. Altogether our results indicate that Ftx is a positive regulator of Xist and lead us to propose that Ftx is a novel ncRNA involved in XCI.