Myotonic dystrophy (DM) is associated with a (CTG) (n) triplet repeat expansion in the 3'-untranslated region of the myotonic dystrophy protein kinase (DMPK) gene. Using electron microscopy, we visualized large RNAs containing up to 130 CUG repeats and studied the binding of purified CUG-binding protein (CUG-BP) to these RNAs. Electron microscopic examination revealed perfect double-stranded (ds)RNA segments whose lengths were that expected for duplex RNA. The RNA dominant mutation model for DM pathogenesis predicts that the expansion mutation acts at the RNA level by forming long dsRNAs that sequester certain RNA-binding proteins. To test this model, we examined the subcellular distribution and RNA-binding properties of CUG-BP. While previous studies have demonstrated that mutant DMPK transcripts accumu-late in nuclear foci, the localization pattern of CUG-BP in both normal and DM cells was similar. Although CUG-BP in nuclear extracts preferentially photocrosslinked to DMPK transcripts, this binding was not proportional to (CUG) (n) repeat size. Moreover, CUG-BP localized to the base of the RNA hairpin and not along the stem, as visualized by electron micro-scopy. These results provide the first visual evidence that the DM expansion forms an RNA hairpin structure and suggest that CUG-BP is unlikely to be a sequestered factor.