Gene expression is regulated at multiple levels, including RNA processing and DNA methylation/demethylation. How these regulations are controlled remains unclear. Here, through analysis of a suppressor for the OsEIN2 over-expressor, we identified an RNA recognition motif protein SUPPRESSOR OF EIN2 (SOE). SOE is localized in nuclear speckles and interacts with several components of the spliceosome. We find SOE associates with hundreds of targets and directly binds to a DNA glycosylase gene DNG701 pre-mRNA for efficient splicing and stabilization, allowing for subsequent DNG701-mediated DNA demethylation of the transgene promoter for proper gene expression. The V81M substitution in the suppressor mutant protein mSOE impaired its protein stability and binding activity to DNG701 pre-mRNA, leading to transgene silencing. SOE mutation enhances grain size and yield. Haplotype analysis in c. 3000 rice accessions reveals that the haplotype 1 (Hap 1) promoter is associated with high 1000-grain weight, and most of the japonica accessions, but not indica ones, have the Hap 1 elite allele. Our study discovers a novel mechanism for the regulation of gene expression and provides an elite allele for the promotion of yield potentials in rice.