Inhibition of muscleblind-like (MBNL) activity due to sequestration by microsatellite expansion RNAs is a major pathogenic event in the RNA-mediated disease myotonic dystrophy (DM). Although MBNL1 and MBNL2 bind to nascent transcripts to regulate alternative splicing during muscle and brain development, another major binding site for the MBNL protein family is the 3′ untranslated region of target RNAs. Here, we report that depletion of Mbnl proteins in mouse embryo fibroblasts leads to misregulation of thousands of alternative polyadenylation events. HITS-CLIP and minigene reporter analyses indicate that these polyadenylation switches are a direct consequence of MBNL binding to target RNAs. Misregulated alternative polyadenylation also occurs in skeletal muscle in a mouse polyCUG model and human DM, resulting in the persistence of neonatal polyadenylation patterns. These findings reveal an additional developmental function for MBNL proteins and demonstrate that DM is characterized by misregulation of pre-mRNA processing at multiple levels.