MicroRNAs are found throughout the genome and are processed by the microprocessor complex (MPC) from longer precursors. Some precursor miRNAs overlap intron:exon junctions. These s plice site o verlapping microRNAs (SO-miRNAs) are mostly located in coding genes. It has been intimated, in the rarer examples of SO-miRNAs in noncoding RNAs, that the competition between the spliceosome and the MPC modulates alternative splicing. However, the effect of this overlap on coding transcripts is unknown. Unexpectedly, we show that neither Drosha silencing nor SF3b1 silencing changed the inclusion ratio of SO-miRNA exons. Two SO-miRNAs, located in genes that code for basal membrane proteins, are known to inhibit proliferation in primary keratinocytes. These SO-miRNAs were up-regulated during differentiation and the host mRNAs were down-regulated, but again there was no change in inclusion ratio of the SO-miRNA exons. Interestingly, Drosha silencing increased nascent RNA density, on chromatin, downstream from SO-miRNA exons. Overall our data suggest a novel mechanism for regulating gene expression in which MPC-dependent cleavage of SO-miRNA exons could cause premature transcriptional termination of coding genes rather than affecting alternative splicing.