Abstract: Alternative pre-mRNA splicing allows dramatic expansion of the eukaryotic proteome and facilitates cellular response to changes in environmental conditions. The Saccharomyces cerevisiae gene SUS1, which encodes a protein involved in mRNA export and histone H2B deubiquitination, contains two introns; non-canonical sequences in the first intron contribute to its retention, a common form of alternative splicing in plants and fungi. Here we show that the pattern of SUS1 splicing changes in response to environmental change such as temperature elevation, and the retained intron product is subject to nonsense-mediated decay. The activities of different splicing factors determine the pattern of SUS1 splicing, including intron retention and exon skipping. Unexpectedly, removal of the 3' intron is affected by splicing of the upstream intron, suggesting that cross-exon interactions influence intron removal. Production of different SUS1 isoforms is important for cellular function, as we find that the temperature sensitivity and histone H2B deubiquitination defects observed in sus1? cells are only partially suppressed by SUS1 cDNA, but SUS1 that is able to undergo splicing complements these phenotypes. These data illustrate a role for S. cerevisiae alternative splicing in histone modification and cellular function and reveal important mechanisms for splicing of yeast genes containing multiple introns.