Myotonic dystrophy type 1 (DM1) is caused by an unstable CTG expansion in the 3' untranslated region (3'UTR) of the myotonic dystrophy protein kinase gene (DMPK). Transcripts from this altered gene harbor large CUG expansions that are retained in the nucleus of DM1 cells and form foci. It is believed that the formation of these foci is closely linked to DM1 muscle pathogenesis. Here we investigated the possibility of using a nuclear-retained hammerhead ribozyme expressed from a modified tRNAmeti promoter to target and cleave mutant transcripts of DMPK. Accessible ribozyme target sites were identified in the 3'UTR of the DMPK mRNA and a hammerhead ribozyme was designed to cut the most accessible site. Utilizing this system, we have achieved 50 and 63% reductions, respectively, of the normal and CUG expanded repeat-containing transcripts. We also observed a significant reduction in the number of DMPK mRNA-containing nuclear foci in human DM1 myoblasts. Reduction of mutant DMPK mRNA and nuclear foci also corroborates with partial restoration of insulin receptor isoform B expression in DM1 myoblasts. These studies demonstrate for the first time intracellular ribozyme-mediated cleavage of nuclear-retained mutant DMPK mRNAs, providing a potential gene therapy agent for the treatment of myotonic dystrophy.