In this paper we analyze the performance of a statistical ATM multiplexer with bursty input traffic and two thresholds in the buffer by using queueing model. Two priority levels are considered for source traffic which is modeled by Markov Modulated Poisson Process to represent the bursty characteristics. Service time distributions of two priority sources are assumed to be same and deterministic for ATM environment. The partial buffer sharing scheme with one threshold may experience a sensitive state change around the threshold. But the proposed multiplexer with two thresholds avoids this hysterical phenominon to improve the system operation.