Type I myotonic dystrophy (DM1) is caused by a triplet repeat expansion in the 3'-untranslated region (UTR) of the dystrophia myotonia protein kinase (DMPK) gene. Pathogenesis is closely linked with production of a toxic RNA from the mutant allele, which interferes with function of several RNA-binding proteins, including CUGBP1. Here we show that expression of a mutant DMPK 3'-UTR containing 960 CUG repeats is sufficient to increase expression and stability of an mRNA encoding the potent proinflammatory cytokine, tumor necrosis factor (TNF). CUGBP1 specifically recognizes sequences within the TNF 3'-UTR that are dissimilar from its canonical UG-rich binding site. Depletion of CUGBP1 from mouse myoblasts results in increased abundance of TNF mRNA through stabilization of the transcript. Moreover, activation of the protein kinase C pathway by treatment with phorbol ester, which has been shown previously to result in CUGBP1 phosphorylation, also causes TNF mRNA stabilization. Our results suggest that the elevated serum TNF seen in DM1 patients may be derived from muscle where it is induced by expression of toxic DMPK RNA. Importantly, overexpression of this potent cytokine could contribute to the muscle wasting and insulin resistance that are characteristic of this debilitating disease.