Loss of MSH1 causes an array of phenotypes, including variegation, dwarfism, altered leaf morphology, delayed flowering, and male sterility. Mutant individuals showing strong phenotypes are often more tolerant to abiotic stress, such as drought or high light. Interestingly, newly derived pedigrees from T-DNA mutants have little phenotype in the S1 homozygous generation, but show the full range of phenotypes starting in the S2 homozygous generation. We performed RNA-seq and sRNA-seq to characterize the differences between msh1 S1 and S2 generation plants, and between individuals of different phenotypes. We find that the degree of transcriptome changes increases according to phenotypic severity, and that the underlying affected pathways include interconnected processes such as abiotic and biotic stress response, plastid regulation, phytohormones, circadian rhythm, and ROS. Small RNA changes also increase from S1 to S2 generations, with different trends depending on phenotype. Together, these results demonstrate the importance of MSH1 function and the downstream pathways that it affects, and help explain the observed stress tolerance associated with particular MSH1 phenotypes.