The full quote, from her journals:
I believe and I want to gather all the facts to illustrate this-that the worst curse on mankind is the ability to consider ideals as quite abstract and detached from ones everyday life. The ability to live and think quite differently, thus eliminating thinking from your actual life. This applies not to deliberate and conscious hypocrites, but to those more dangerous and hopeless ones who along with themselves and to themselves, tolerate a complete break between their convictions and their lives, and still believe they have convictions. To them either their ideals, or their lives are worthless, and usually both.
I hold religion mainly responsible for this. I want to prove that religion breaks a character before its formed, in childhood, by teaching a child lies before he knows what a lie is. By breaking him of the habit of thinking before he has begun to think, by making him a hypocrite before he knows any other possible attitude toward life. If a child is taught ideals he knows is contrary to his own deepest instincts, ideas such as unselfishness, meekness, and self sacrifice...
If he is told he is a miserable sinner for not living up to ideals he can never reach, and doesn't want to reach, then his natural reaction is to consider all ideals as out of his reach forever... as something theoretical, and quite apart from his own actual life. Thus the beginning of self hypocrisy. The killing of all desire for a living ideal.
April 9th, 1934 - The Journals of Ayn Rand