Myotonic dystrophy, or dystrophia myotonica (DM), is an autosomal dominant multisystem disorder caused by the expansion of a CTG trinucleotide repeat in the 3' untranslated region of the DMPK protein kinase gene on chromosome 19q13.3 (refs 1-3). Although the DM mutation was identified more than five years ago, the pathogenic mechanisms underlying this most prevalent form of hereditary adult neuromuscular disease remain elusive. Previous work from our laboratory demonstrated that a DNase l-hypersensitive site located adjacent to the repeats on the wild-type allele is eliminated by repeat expansion, indicating that large CTG-repeat arrays may be associated with a local chromatin environment that represses gene expression. Here we report that the hypersensitive site contains an enhancer element that regulates transcription of the adjacent DMAHP homeobox gene. Analysis of DMAHP expression in the cells of DM patients with loss of the hypersensitive site revealed a two- to fourfold reduction in steady-state DMAHP transcript levels relative to wild-type controls. Allele-specific analysis of DMAHP expression showed that steady-state transcript levels from the expanded allele were greatly reduced in comparison to those from the wild-type allele. Together, these results demonstrate that CTG-repeat expansions can suppress local gene expression and implicate DMAHP in DM pathogenesis.