Myotonic dystrophy type 1 (DM1) is a multisystem, autosomal-dominant inherited disorder caused by CTG microsatellite repeat expansions (MREs) in the 3' untranslated region of the dystrophia myotonica-protein kinase (DMPK) gene. Despite its prominence as the most common adult-onset muscular dystrophy, patients with congenital to juvenile-onset forms of DM1 can present with debilitating neurocognitive symptoms along the autism spectrum, characteristic of possible in utero cortical defects. However, the molecular mechanism by which CTG MREs lead to these developmental central nervous system (CNS) manifestations is unknown. Here, we showed that CUG foci found early in the maturation of three-dimensional (3D) cortical organoids from DM1 patient-derived induced pluripotent stem cells (iPSCs) cause hyperphosphorylation of CUGBP Elav-like family member 2 (CELF2) protein. Integrative single-cell RNA sequencing and enhanced cross-linking and immunoprecipitation (eCLIP) analysis revealed that reduced CELF2 protein-RNA substrate interactions results in misregulation of genes critical for excitatory synaptic signaling in glutamatergic neurons, including key components of the methyl-CpG binding protein 2 (MECP2) pathway. Comparisons to MECP2(y/-) cortical organoids revealed convergent molecular and cellular defects such as glutamate toxicity and neuronal loss. Our findings provide evidence suggesting that early-onset DM1 might involve neurodevelopmental disorder-associated pathways and identify N-methyl-d-aspartic acid (NMDA) antagonists as potential treatment avenues for neuronal defects in DM1.