Spliceosome assembly in the budding yeast Saccharomyces cerevisiae was recently shown to occur at the site of transcription. However, evidence for cotranscriptional splicing as well as for coupling between transcription and splicing is still lacking. Using modifications of a previously published chromatin immunoprecipitation (ChIP) assay, we show that cotranscriptional splicing occurs ∼1 kb after transcription of the 3′ splice site (3′SS). This pathway furthermore protects most intron-containing nascent transcripts from the effects of cleavage by an intronic hammerhead ribozyme. This suggests that a high percentage of introns are recognized cotranscriptionally. This observation led us to screen a small deletion library for strains that sensitize a splicing reporter to ribozyme cleavage. Characterization of the Δmud2 strain indicates that the early splicing factor Mud2p functions with U1 snRNP to form a cross-intron bridging complex on nascent pre-mRNA. The complex helps protect the transcript from ribozyme-mediated destruction and suggests an intron-definition event early in the spliceosome assembly process. The transcription elongation mutant strains Δdst1 and Δpaf1 show different cotranscriptional splicing phenotypes, suggesting that different transcription pathways differentially impact the efficiency of nascent intron definition.