Transferrin receptor (TfR) is a dimeric cell surface protein that binds both the serum iron transport protein transferrin (Fe-Tf) and HFE, the protein mutated in patients with the iron overload disorder hereditary hemochromatosis. HFE and Fe-Tf can bind simultaneously to TfR to form a ternary complex, but HFE binding to TfR lowers the apparent affinity of the Fe-Tf/TfR interaction. This apparent affinity reduction could result from direct competition between HFE and Fe-Tf for their overlapping binding sites on each TfR polypeptide chain, from negative cooperativity, or from a combination of both. To explore the mechanism of the affinity reduction, we constructed a heterodimeric TfR that contains mutations such that one TfR chain binds only HFE and the other binds only Fe-Tf. Binding studies using a heterodimeric form of soluble TfR demonstrate that TfR does not exhibit cooperativity in heterotropic ligand binding, suggesting that some or all of the effects of HFE on iron homeostasis result from competition with Fe-Tf for TfR binding. Experiments using transfected cell lines demonstrate a physiological role for this competition in altering HFE trafficking patterns.