We show that CUG repeats form 'slippery' hairpins in their natural sequence context of the myotonin kinase gene transcript. This novel type of RNA structure is characterized by strong S1 and T1 nuclease and lead cleavages in the terminal loop and by mild lead cleavages in the hairpin stem. The latter effect indicates a relaxed metastable structure of the stem. (CUG)5 repeats do not form any detectable secondary structure, whereas hairpins of increasing stability are formed by (CUG)11, (CUG)21, and (CUG)49. The potential role of the RNA hairpin structure in the pathogenesis of myotonic dystrophy is discussed.