Arrestins quench the signaling of a wide variety of G protein-coupled receptors by virtue of high-affinity binding to phosphorylated activated receptors. The high selectivity of arrestins for this particular functional form of receptor ensures their timely binding and dissociation. In a continuing effort to elucidate the molecular mechanisms responsible for arrestin's selectivity, we used the visual arrestin model to probe the functions of its N-terminal beta-strand I comprising the highly conserved hydrophobic element Val-Ile-Phe (residues 11-13) and the adjacent positively charged Lys(14) and Lys(15). Charge elimination and reversal in positions 14 and 15 dramatically reduce arrestin binding to phosphorylated light-activated rhodopsin (P-Rh*). The same mutations in the context of various constitutively active arrestin mutants (which bind to P-Rh*, dark phosphorylated rhodopsin (P-Rh), and unphosphorylated light-activated rhodopsin (Rh*)) have minimum impact on P-Rh* and Rh* binding and virtually eliminate P-Rh binding. These results suggest that the two lysines "guide" receptor-attached phosphates toward the phosphorylation-sensitive trigger Arg(175) and participate in phosphate binding in the active state of arrestin. The elimination of the hydrophobic side chains of residues 11-13 (triple mutation V11A, I12A, and F13A) moderately enhances arrestin binding to P-Rh and Rh*. The effects of triple mutation V11A, I12A, and F13A in the context of phosphorylation-independent mutants suggest that residues 11-13 play a dual role. They stabilize arrestin's basal conformation via interaction with hydrophobic elements in arrestin's C-tail and alpha-helix I as well as its active state by interactions with alternative partners. In the context of the recently solved crystal structure of arrestin's basal state, these findings allow us to propose a model of initial phosphate-driven structural rearrangements in arrestin that ultimately result in its transition into the active receptor-binding state.