RNA-driven protein aggregation leads to cellular dysregulation, disrupting normal cellular processes, and contributing to the development of diseases and tumorigenesis. Here, we show that double homeobox 4 (DUX4), an early embryonic transcription factor and causative gene of facioscapulohumeral muscular dystrophy (FSHD), induces the accumulation of stable intranuclear RNAs, including nucleolar RNA and human satellite II (HSATII) RNA. Stable intranuclear RNAs drive protein aggregation in DUX4-expressing muscle cells. Specifically, HSATII RNA sequesters RNA methylation factors. HSATII-YBX1 ribonucleoprotein (RNP) complex formation is mediated by HSATII double-stranded RNA and NSUN2 activity. Aberrant HSATII-RNP complexes affect RNA processing pathways, including RNA splicing. Differential splicing of genes mediated by HSATII-RNP complexes are associated with pathways known to be dysregulated by DUX4 expression. These findings highlight the broader influence of DUX4 on nuclear RNA dynamics and suggest that HSATII RNA could be a critical mediator of RNA processing regulation. Understanding the impact of HSATII-RNP formation on RNA processing provides insight into the molecular mechanisms underlying FSHD.