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Numerous studies have investigated the role of thermal instability in regulating the phase transition between the cold cloudy and warm diffuse medium of the interstellar medium. Considerable interest has also been devoted to investigating the properties of turbulence in thermally unstable flows, with a special emphasis on molecular clouds and the possibility of star formation. In this study, we investigate another setting in which this instability may be important, namely its effect on dynamo action in interstellar flows. The setup we consider is a three-dimensional periodic cube of gas with an initially weak magnetic field, subject to heating and cooling, the properties of which are such that thermal instability is provoked in a certain temperature regime. Dynamo action is established through external forcing on the flow field. By comparing the results with a cooling function with exactly the same net effect but no thermally unstable regime, we find the following. Reference runs with non-helical forcing were observed to produce no small-scale dynamo action below the Reynolds number 97. Therefore, we expect the magnetic fields generated in the helical runs to be purely due to the action of a large-scale dynamo mechanism. The critical Reynolds number for the onset of the large-scale dynamo was observed to roughly double between the thermally stable versus unstable runs, the conclusion being that the thermal instability makes large-scale dynamo action more difficult. Whereas density and magnetic fields were observed to be almost completely uncorrelated in the thermally stable cases investigated, the action of thermal instability was observed to produce a positive correlation of the form B ∝ ρ0.2. This correlation is rather weak, and in addition it was observed to break down at the limit of highest densities.