Myotonic dystrophy type I (DM1), which is caused by a non-coding CTG-repeat expansion in the dystrophia myotonica-protein kinase (DMPK) gene, is an RNA-mediated disease. Expanded CUG repeats in transcripts of mutant DMPK form nuclear foci that recruit muscleblind-like (MBNL) proteins, a family of alternative splicing factors. Although transcripts of mutant DMPK and MBNL proteins accumulate in nuclear RNA foci, it is not clear whether foci formation is required for splicing mis-regulation. Here, we use a co-transfection strategy to show that both CUG and CAG repeats form RNA foci that colocalize with green fluorescent protein (GFP)-MBNL1 and endogenous MBNL1. However, only CUG repeats alter splicing of the two tested pre-mRNAs, cardiac troponin T (cTNT) and insulin receptor (IR). Using FRAP, we demonstrate that GFP-MBNL1 in CUG and CAG foci have similar half-times of recovery and fractions of immobile molecules, suggesting that GFP-MBNL1 is bound by both CUG and CAG repeats. We also find an immobile fraction of GFP-MBNL1 in DM1 fibroblasts and a similar rapid exchange in endogenous CUG RNA foci. Therefore, formation of RNA foci and disruption of MBNL1-regulated splicing are separable events.