BACKGROUND: Transcription cofactors related to Drosophila Schnurri facilitate the transcriptional programs regulated by BMP signaling in C. elegans, Drosophila, Xenopus, and mouse. In different systems, Schnurri homologs have been shown to act as either agonists or antagonists of Smad function, and as either positive or negative regulators of transcription. How Schnurri proteins achieve this diversity of activities is not clear. The C. elegans sma-9/schnurri locus undergoes alternative splicing, including an unusual trans-splicing event that could generate two non-overlapping shorter transcripts. RESULTS: We demonstrate here that the shorter transcripts are expressed in vivo. Furthermore, we find that one of the short transcripts plays a tissue-specific role in sma-9 function, contributing to the patterning of male-specific sensory rays, but not to the regulation of body size. Based on previous results, we suggest that this transcript encodes a C-terminal SMA-9 isoform that may provide transcriptional activation activity, while full length isoforms may mediate transcriptional repression and/or activation in a context-dependent manner. CONCLUSION: The alternative trans-splicing of sma-9 may contribute to the diversity of functions necessary to mediate tissue-specific outputs of BMP signaling.