ATM is an important cancer susceptibility gene that encodes a critical apical kinase of the DNA damage response (DDR) pathway. We show that a key nonsense-mediated RNA decay switch exon (NSE) in ATM is repressed by U2AF, PUF60 and hnRNPA1. The NSE activation was haplotype-specific and was most promoted by cytosine at rs609621 in the NSE 3' splice-site (3'ss), which is predominant in high cancer risk populations. NSE levels were deregulated in leukemias and were influenced by the identity of U2AF35 residue 34. We also identify splice-switching oligonucleotides (SSOs) that exploit competition of adjacent pseudoexons to modulate NSE levels. The U2AF-regulated exon usage in the ATM signalling pathway was centred on the MRN/ATM-CHEK2-CDC25-cdc2/cyclin-B axis and preferentially involved transcripts implicated in cancer-associated gene fusions and chromosomal translocations. These results reveal important links between 3'ss control and ATM-dependent responses to double-strand DNA breaks, demonstrate functional plasticity of intronic variants and illustrate versatility of intronic SSOs that target pseudo-3'ss to modify gene expression.