Alternative splicing regulates developmentally and tissue-specific gene expression programs, disruption of which have been implicated in numerous diseases. Muscleblind-like 1 (MBNL1) regulates splicing transitions, which are disrupted on loss of MBNL1 function in myotonic dystrophy type 1 (DM1). One such event is MBNL1-mediated activation of insulin receptor exon 11 inclusion, which requires an intronic enhancer element downstream of exon 11. The mechanism of MBNL1-mediated activation of exon inclusion is unknown. We developed an in vitro splicing assay, which robustly recapitulates MBNL1-mediated splicing activation of insulin receptor exon 11 and found that MBNL1 activates removal of the intron upstream of exon 11 upon binding its functional response element in the downstream intron. MBNL1 enhances early spliceosome assembly as evidenced by enhanced complex A formation and binding of U2 small nuclear ribonucleoprotein auxiliary factor 65 kDa subunit (U2AF65) on the upstream intron. We demonstrated that neither the 5' splice site nor exon 11 sequences are required for MBNL1-activated U2AF65 binding. Interestingly, the 5' splice site is required for MBNL1-mediated activation of upstream intron removal, although MBNL1 has no effect on U1 snRNA recruitment. These results suggest that MBNL1 directly activates binding of U2AF65 to enhance upstream intron removal to ultimately activate alternative exon inclusion.