Group A protein type 2C phosphatases (PP2Cs) are negative regulators of abscisic acid(ABA) signalling and plant adaptation to stress. However, our knowledge of the regulation of PP2C activity is limited. Here we report that the PP2C HAB1 undergoes alternative splicing to produce two splice variants, which encode HAB1.1 and HAB1.2, that play opposing roles in ABA-mediated seed germination and ABA-mediated post-germination developmental arrest. HAB1.2 is predominately formed in the presence of ABA and prevents seed germination and post-germinative growth. HAB1.2 interacts with OST1, but cannot inhibit OST1 kinase activity; thus, it functions as a positive regulator of ABA signalling. We also identified an RNA-recognition motif-containing protein, RBM25, as a potential regulator of HAB1 alternative splicing and molecular diversity. Our results reveal a mechanism for turning ABA signalling on and off and for plant adaptation to abiotic stress.