Alternate splicing contributes extensively to cellular complexity by generating protein isoforms with divergent functions. However, the role of alternate isoforms in development remains poorly understood. Mef2 transcription factors are essential transducers of cell signaling that modulate differentiation of many cell types. Among Mef2 family members, Mef2D is unique, as it undergoes tissue-specific splicing to generate a muscle-specific isoform. Since the ubiquitously expressed (Mef2Dα1) and muscle-specific (Mef2Dα2) isoforms of Mef2D are both expressed in muscle, we examined the relative contribution of each Mef2D isoform to differentiation. Using both in vitro and in vivo models, we demonstrate that Mef2D isoforms act antagonistically to modulate differentiation. While chromatin immunoprecipitation (ChIP) sequencing analysis shows that the Mef2D isoforms bind an overlapping set of genes, only Mef2Dα2 activates late muscle transcription. Mechanistically, the differential ability of Mef2D isoforms to activate transcription depends on their susceptibility to phosphorylation by protein kinase A (PKA). Phosphorylation of Mef2Dα1 by PKA provokes its association with corepressors. Conversely, exon switching allows Mef2Dα2 to escape this inhibitory phosphorylation, permitting recruitment of Ash2L for transactivation of muscle genes. Thus, our results reveal a novel mechanism in which a tissue-specific alternate splicing event has evolved that permits a ubiquitously expressed transcription factor to escape inhibitory signaling for temporal regulation of gene expression.