Alternative pre-mRNA splicing plays important roles in regulating self-renewal and differentiation of embryonic stem cells (ESCs). However, how specific alternative splicing programs are established in ESCs remains elusive. Here, we show that a subset of alternative splicing events in ESCs is dependent on miR-294 expression. Remarkably, roughly 60% of these splicing events are affected by the depletion of Muscleblind-Like Splicing Regulator 1 and 2 (Mbnl1/2). Distinct from canonical miRNA function, miR-294 represses Mbnl1/2 through both posttranscriptional and epigenetic mechanisms. Furthermore, we uncover non-canonical functions of MBNL proteins that bind and promote the expression of miR-294 targets, including Cdkn1a and Tgfbr2, thereby opposing the role of miR-294 in regulating cell proliferation, apoptosis, and epithelial-mesenchymal transition (EMT). Our study reveals extensive interactions between miRNAs and splicing factors, highlighting their roles in regulating cell type-specific alternative splicing and defining gene expression programs during development and cellular differentiation.