This Gist demonstrates how to use WCF with MSMQ to handle dead letters or poison messages.

ClientProgram.cs

namespace Client
{
    using System;
    using System.ServiceModel;

    using Contracts;

    internal class ClientProgram
    {
        public static void Main(string[] args)
        {
            ChannelFactory<ISayHelloService> channelFactory = null;
            ISayHelloService service = null;
            ServiceHost deadLetterServiceHost = null;
            try
            {
#if false
                // Just for reference purposes, you can use this code if you
                // want messages to go to the system's dead letter queue.
                var netMsmqBinding = new NetMsmqBinding(NetMsmqSecurityMode.None)
                    { DeadLetterQueue = DeadLetterQueue.System, TimeToLive = TimeSpan.FromSeconds(20.0) };
#else
                var netMsmqBinding = new NetMsmqBinding(NetMsmqSecurityMode.None)
                    {
                        DeadLetterQueue = DeadLetterQueue.Custom,
                        CustomDeadLetterQueue = new Uri("net.msmq://localhost/private/wcftestdeadletter"),
                        TimeToLive = TimeSpan.FromMinutes(2.0)
                    };
#endif
                var remoteAddress = new EndpointAddress("net.msmq://localhost/private/wcftest");
                channelFactory = new ChannelFactory<ISayHelloService>(netMsmqBinding, remoteAddress);
                channelFactory.Open();

                var baseAddress = new Uri("net.msmq://localhost/private");
                deadLetterServiceHost = new ServiceHost(typeof(SayHelloDeadLetterService), baseAddress);
                netMsmqBinding = new NetMsmqBinding(NetMsmqSecurityMode.None);
                deadLetterServiceHost.AddServiceEndpoint(typeof(ISayHelloService), netMsmqBinding, "/wcftestdeadletter");
                deadLetterServiceHost.Open();

                service = channelFactory.CreateChannel();
                var clientChannel = service as IClientChannel;
                if (CommunicationState.Opened != clientChannel.State)
                {
                    clientChannel.Open();
                }

                Console.Error.WriteLine("Enter a name to send. Enter a blank line to exit.");
                while (true)
                {
                    var name = Console.ReadLine();
                    if (string.IsNullOrWhiteSpace(name))
                    {
                        break;
                    }

                    service.SayHello(name);
                }
            }
            finally
            {
                var clientChannel = service as IClientChannel;
                if (null != clientChannel && CommunicationState.Opened == clientChannel.State)
                {
                    clientChannel.Close();
                    clientChannel.Dispose();
                }

                if (null != channelFactory && CommunicationState.Opened == channelFactory.State)
                {
                    channelFactory.Close();
                }

                if (null != deadLetterServiceHost && CommunicationState.Opened == deadLetterServiceHost.State)
                {
                    deadLetterServiceHost.Close();
                }
            }
        }
    }
}

ISayHelloService.cs

namespace Contracts
{
    using System.ServiceModel;

    [ServiceContract]
    public interface ISayHelloService
    {
        [OperationContract(IsOneWay = true)]
        void SayHello(string to);
    }
}

SayHelloDeadLetterService.cs

namespace Client
{
    using System;
    using System.ServiceModel;

    using Contracts;

    [ServiceBehavior(AddressFilterMode = AddressFilterMode.Any)]
    internal class SayHelloDeadLetterService : ISayHelloService
    {
        public void SayHello(string to)
        {
            Console.Error.WriteLine("DEAD LETTER: {0}", to);
        }
    }
}

SayHelloPoisonMessageService.cs

namespace Service
{
    using System;
    using System.ServiceModel;

    using Contracts;

    [ServiceBehavior(AddressFilterMode = AddressFilterMode.Any)]
    internal class SayHelloPoisonMessageService : ISayHelloService
    {
        [OperationBehavior(TransactionScopeRequired = true, TransactionAutoComplete = true)]
        public void SayHello(string to)
        {
            Console.Error.WriteLine("POISON MESSAGE: {0}", to);
        }
    }
}

SayHelloService.cs

namespace Service
{
    using System;
    using System.ServiceModel;

    using Contracts;

    [ServiceBehavior(InstanceContextMode = InstanceContextMode.Single)]
    internal class SayHelloService : ISayHelloService
    {
        [OperationBehavior(TransactionScopeRequired = true, TransactionAutoComplete = true)]
        public void SayHello(string to)
        {
            if (to.Equals("john", StringComparison.OrdinalIgnoreCase))
            {
                Console.Error.WriteLine("ERROR: John is not welcome.");
                throw new Exception("John is not welcome.");
            }

            Console.Out.WriteLine("Hello, {0}!", to);
        }
    }
}

ServiceProgram.cs

namespace Service
{
    using System;
    using System.ServiceModel;

    using Contracts;

    internal class ServiceProgram
    {
        public static void Main(string[] args)
        {
            ServiceHost serviceHost = null;
            ServiceHost poisonMessageHost = null;
            try
            {
                var baseAddress = new Uri("net.msmq://localhost/private");
                serviceHost = new ServiceHost(typeof(SayHelloService), baseAddress);
                var netMsmqBinding = new NetMsmqBinding(NetMsmqSecurityMode.None)
                {
                    ReceiveRetryCount = 1,
                    ReceiveErrorHandling = ReceiveErrorHandling.Move,
                    MaxRetryCycles = 1,
                    RetryCycleDelay = TimeSpan.FromSeconds(10.0)
                };
                serviceHost.AddServiceEndpoint(typeof(ISayHelloService), netMsmqBinding, "/wcftest");
                serviceHost.Open();

                poisonMessageHost = new ServiceHost(typeof(SayHelloPoisonMessageService));
                netMsmqBinding = new NetMsmqBinding(NetMsmqSecurityMode.None);
                poisonMessageHost.AddServiceEndpoint(
                    typeof(ISayHelloService), netMsmqBinding, new Uri("net.msmq://localhost/private/wcftest;poison"));
                poisonMessageHost.Open();

                Console.Error.WriteLine("The service is listening for requests. Press Enter to exit.");
                Console.In.ReadLine();
            }
            catch (Exception ex)
            {
                Console.Error.WriteLine("\n{0}\n\nPress Enter to exit.", ex);
                Console.In.ReadLine();
            }
            finally
            {
                if (null != serviceHost && CommunicationState.Opened == serviceHost.State)
                {
                    serviceHost.Close();
                }

                if (null != poisonMessageHost && CommunicationState.Opened == poisonMessageHost.State)
                {
                    poisonMessageHost.Close();
                }
            }
        }
    }
}