In the unfolded protein response (UPR), protein-folding stress in the endoplasmic reticulum (ER) activates a large transcriptional program to increase ER folding capacity. During the budding yeast UPR, the trans-ER-membrane kinase-endoribonuclease Ire1 excises an intron from the HAC1 mRNA and the exon cleavage products are ligated and translated to a transcription factor that induces hundreds of stress-response genes. HAC1 cleavage by Ire1 is thought to be the rate limiting step of its processing. Using cells with mutations in RNA repair and decay enzymes, we show that phosphorylation of two different HAC1 splicing intermediates by Trl1 RNA 5′-kinase is required for their degradation by the 5′→3′ exonuclease Xrn1 to enact opposing effects on the UPR. Kinase-mediated decay (KMD) of cleaved HAC1 3′-exon competes with its ligation to limit productive splicing and suppress the UPR, whereas KMD of the excised intron activates HAC1 translation, likely by relieving an inhibitory base-pairing interaction between the intron and 5′-untranslated region. We also found that ligated but 2′-phosphorylated HAC1 mRNA is endonucleolytically cleaved, yielding a KMD intermediate with both 5′- and 2′-phosphates at its 5′-end that inhibit 5′→3′ decay, and suggesting that Ire1 initiates the degradation of incompletely processed HAC1s to proofread ligation or attenuate the UPR. These multiple decay events expand the scope of RNA-based regulation in the budding yeast UPR and may have implications for the control of the metazoan UPR by mRNA processing.