The Drosophila Y chromosome is a 40-Mb segment of mostly repetitive DNA; it harbors a handful of protein-coding genes and a disproportionate amount of satellite repeats, transposable elements, and multicopy DNA arrays. Intron retention (IR) is a type of alternative splicing (AS) event by which one or more introns remain within the mature transcript. IR recently emerged as a deliberate cellular mechanism to modulate gene expression levels and has been implicated in multiple biological processes. However, the extent of sex differences in IR and the contribution of the Y chromosome to the modulation of AS and IR rates has not been addressed. Here we showed pervasive IR in the fruit fly Drosophila melanogaster with thousands of novel IR events, hundreds of which displayed extensive sex bias. The data also revealed an unsuspected role for the Y chromosome in the modulation of AS and IR. The majority of sex-biased IR events introduced premature termination codons and the magnitude of sex bias was associated with gene expression differences between the sexes. Surprisingly, an extra Y chromosome in males (X^YY genotype) or the presence of a Y chromosome in females (X^XY genotype) significantly modulated IR and recapitulated natural differences in IR between the sexes. Our results highlight the significance of sex-biased IR in tuning sex differences and the role of the Y chromosome as a source of variable IR rates between the sexes. Modulation of splicing and IR rates across the genome represent new and unexpected outcomes of the Drosophila Y chromosome.