Myotonic dystrophy (DM1) is an autosomal dominant neuromuscular disorder associated with a (CTG)(n) expansion in the 3'-untranslated region of the DM1 protein kinase (DMPK) gene. To explain disease pathogenesis, the RNA dominance model proposes that the DM1 mutation produces a gain-of-function at the RNA level in which CUG repeats form RNA hairpins that sequester nuclear factors required for proper muscle development and maintenance. Here, we identify the triplet repeat expansion (EXP) RNA-binding proteins as candidate sequestered factors. As predicted by the RNA dominance model, binding of the EXP proteins is specific for dsCUG RNAs and proportional to the size of the triplet repeat expansion. Remarkably, the EXP proteins are homologous to the Drosophila muscleblind proteins required for terminal differentiation of muscle and photoreceptor cells. EXP expression is also activated during mammalian myoblast differentiation, but the EXP proteins accumulate in nuclear foci in DM1 cells. We propose that DM1 disease is caused by aberrant recruitment of the EXP proteins to the DMPK transcript (CUG)(n) expansion.