Myotonic dystrophy (DM1) is a multisystemic disorder caused by a CTG repeat expansion within the 3'-UTR of the DMPK gene. DM1 is characterized by delayed muscle development, muscle weakness and wasting, cardiac conduction abnormalities, cognitive defects and cataracts. Recent studies have demonstrated that the disease mechanism involves a dominant gain-of-function conferred upon mutant transcripts by expanded repeats. However, further attempts to model aspects of DM muscle pathology in cultured myoblasts suggest that 3'-UTR sequences flanking the CTG repeat tract are also required for full expression of the disease phenotype. Here, we report that overexpression of the DMPK 3'-UTR including either wild-type (11) or expanded (91) CTG repeats results in aberrant and delayed muscle development in fetal transgenic mice. In addition, transgenic animals with both expanded and wild-type CTG repeats display muscle atrophy at 3 months of age. Primary myoblast cultures from both 11 and 91 repeat mice display reduced fusion potential, but a greater reduction is observed in the 91 repeat cultures. Taken together, these data indicate that overexpression of the DMPK 3'-UTR interferes with normal muscle development in mice and that this is exacerbated by inclusion of a mutant repeat. This suggests that the delayed muscle development in DM1 involves an interplay between the expanded CTG repeat and adjacent 3'-UTR sequences.