Muscleblind (mbl) is an essential muscle and neuronal splicing regulator. Mbl hosts multiple circular RNAs (circRNAs), including circMbl, which is conserved from flies to humans. Here, we show that mbl-derived circRNAs are key regulators of MBL by cis- and trans-acting mechanisms. By generating fly lines to specifically modulate the levels of all mbl RNA isoforms, including circMbl, we demonstrate that the two major mbl protein isoforms, MBL-O/P and MBL-C, buffer their own levels by producing different types of circRNA isoforms in the eye and fly brain, respectively. Moreover, we show that circMbl has unique functions in trans, as knockdown of circMbl results in specific morphological and physiological phenotypes. In addition, depletion of MBL-C or circMbl results in opposite behavioral phenotypes, showing that they also regulate each other in trans. Together, our results illuminate key aspects of mbl regulation and uncover cis and trans functions of circMbl in vivo.