Diploid budding yeast exhibits two developmental programs in response to nitrogen starvation, pseudohyphal growth, and sporulation. Here we show that both programs are repressed by activation of the unfolded protein response (UPR), a stress-signal transduction pathway responsible for induction of endoplasmic reticulum (ER)-resident chaperones when protein folding in the ER is impaired. Pseudohyphal growth was derepressed in ire1Delta/ire1Delta and hac1Delta/hac1Delta strains. Activation of the UPR or overexpression of the transcription factor Hac1(i)p, the product of an unconventional splicing reaction regulated by the UPR, was sufficient for repression of pseudohyphal growth and meiosis. HAC1 splicing occurred in a nitrogen-rich environment but ceased rapidly on nitrogen starvation. Further, addition of ammonium salts to nitrogen-starved cells was sufficient to rapidly reactivate HAC1 splicing. We propose that high translation rates in a nitrogen-rich environment are coupled to limited protein unfolding in the ER, thereby activating the UPR. An activated UPR then represses pseudohyphal growth and meiosis. Nitrogen starvation slows translation rates, allowing for more efficient folding of nascent polypeptide chains, down-regulation of the UPR, and subsequent derepression of pseudohyphal growth and meiosis. These findings significantly broaden the range of physiological functions of the UPR and define a role for the UPR in nitrogen sensing.