Alternative splicing generates protein isoforms that are conditionally or differentially expressed in specific tissues. The discovery of factors that control alternative splicing might clarify the molecular basis of biological and pathological processes. We found that IL1-α-dependent up-regulation of 38A, a small ribonucleic acid (RNA) polymerase III-transcribed RNA, drives the synthesis of an alternatively spliced form of the potassium channel-interacting protein (KCNIP4). The alternative KCNIP4 isoform cannot interact with the γ-secretase complex, resulting in modification of γ-secretase activity, amyloid precursor protein processing, and increased secretion of β-amyloid enriched in the more toxic Aβ x-42 species. Notably, synthesis of the variant KCNIP4 isoform is also detrimental to brain physiology, as it results in the concomitant blockade of the fast kinetics of potassium channels. This alternative splicing shift is observed at high frequency in tissue samples from Alzheimer's disease patients, suggesting that RNA polymerase III cogenes may be upstream determinants of alternative splicing that significantly contribute to homeostasis and pathogenesis in the brain.