SMCHD1 is a non-canonical SMC protein and an epigenetic regulator. Mutations in SMCHD1 cause facioscapulohumeral muscular dystrophy type 2 (FSHD2), a genetic disorder characterized by progressive muscle weakness and wasting, believed to be caused by aberrant expression of DUX4 in muscle cells. Here we demonstrate a new role for SMCHD1 as a regulator of alternative splicing in various cell types. We show how SMCHD1 loss cause splicing alterations of DNMT3B which can lead to hypomethylation, DUX4 expression, and FSHD pathogenesis. Analyzing RNA-seq data from muscle biopsies of FSHD2 patients and Smchd1 knocked out cells, we found mis-splicing of hundreds of genes upon SMCHD1 loss. At least 20% of mis-spliced genes were associated with abnormalities of the musculature. Moreover, mis-spliced exons tend to be bound by SMCHD1, and bound exons demonstrate a slower elongation rate, suggesting SMCHD1 binding promotes exon exclusion by slowing RNAPII, and recruitment of the splicing factor RBM5. The mis-splicing of DNMT3B leads to hypomethylation of the D4Z4 region and to DUX4 overexpression. These results suggest that mis-splicing by SMCHD1 may play a major role in FSHD2 pathogenesis by promoting the mis-splicing of different targets including DNMT3B, and highlight the potential for targeting splicing as a therapeutic strategy.