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Cells adjust to hypoxic stress within the tumor microenvironment by downregulating energy-consuming processes including translation. To delineate mechanisms of cellular adaptation to hypoxia, we performed RNA-Seq of normoxic and hypoxic head and neck cancer cells. These data revealed a significant down regulation of genes known to regulate RNA processing and splicing. Exon-level analyses classified > 1,000 mRNAs as alternatively spliced under hypoxia and uncovered a unique retained intron (RI) in the master regulator of translation initiation, EIF2B5. Notably, this intron was expressed in solid tumors in a stage-dependent manner. We investigated the biological consequence of this RI and demonstrate that its inclusion creates a premature termination codon (PTC), that leads to a 65kDa truncated protein isoform that opposes full-length eIF2Bε to inhibit global translation. Furthermore, expression of 65kDa eIF2Bε led to increased survival of head and neck cancer cells under hypoxia, providing evidence that this isoform enables cells to adapt to conditions of low oxygen. Additional work to uncover -cis and -trans regulators of EIF2B5 splicing identified several factors that influence intron retention in EIF2B5: a weak splicing potential at the RI, hypoxia-induced expression and binding of the splicing factor SRSF3, and increased binding of total and phospho-Ser2 RNA polymerase II specifically at the intron retained under hypoxia. Altogether, these data reveal differential splicing as a previously uncharacterized mode of translational control under hypoxia and are supported by a model in which hypoxia-induced changes to cotranscriptional processing lead to selective retention of a PTC-containing intron in EIF2B5.