The selenoenzyme, type 1 iodothyronine deiodinase (type 1 DI), catalyzes the activation of thyroxine (T4) to 3,5,3'-triiodothyronine (T3) but 3,3',5'-triiodothyronine (rT3) is the preferred substrate for the human enzyme. Since the dog type 1 DI has a significantly lower affinity for rT3, we cloned the dog type 1 DI to identify amino acids critical for rT3 binding. The Km of the transiently expressed dog enzyme for rT3 5'-deiodination is 25-fold higher than that of the human enzyme. However, the Ki of T4 for rT3 deiodination by dog type 1 DI is only 3-fold higher than that for the human, suggesting that the differences between the two proteins affect binding of rT3 more than that of T4. Comparative competition studies in which rT3 or T4 is used to block covalent bromoacetyl T3 binding to the two proteins support this. Mutational studies showed that the critical differences between the dog (D) and human (H) enzymes are Asn (D) 45 Gly (H), Gly (D) 46 Glu (H), and Leu (D) 60:Phe (H) 65. Substitution of the human residues for those of the dog at these positions causes the predicted changes in the Km (rT3) and vice versa. A Phe65 to Leu mutation alone in the human enzyme increases the Km (rT3) 10-fold. We speculate that Phe65 is especially important for rT3 binding due to an interaction between the tyrosyl ring of rT3 and the aromatic ring of Phe65.