Circular RNAs (circRNAs) are a diverse and abundant class of hyper-stable, non-canonical RNAs that arise through a form of alternative splicing (AS) called back-splicing. These single-stranded, covalently-closed circRNA molecules have been identified in all eukaryotic kingdoms of life1, yet their functions have remained elusive. Here, we report that circRNAs can be used as bona fide biomarkers of functional, exon-skipped AS variants in Arabidopsis, including in the homeotic MADS-box transcription factor family. Furthermore, we demonstrate that circRNAs derived from exon 6 of the SEPALLATA3 (SEP3) gene increase abundance of the cognate exon-skipped AS variant (SEP3.3 which lacks exon 6), in turn driving floral homeotic phenotypes. Toward demonstrating the underlying mechanism, we show that the SEP3 exon 6 circRNA can bind strongly to its cognate DNA locus, forming an RNA:DNA hybrid, or R-loop, whereas the linear RNA equivalent bound significantly more weakly to DNA. R-loop formation results in transcriptional pausing, which has been shown to coincide with splicing factor recruitment and AS2-4. This report presents a novel mechanistic insight for how at least a subset of circRNAs probably contribute to increased splicing efficiency of their cognate exon-skipped messenger RNA and provides the first evidence of an organismal-level phenotype mediated by circRNA manipulation.