The highly homologous beta-arrestin1 and -2 adaptor proteins play important roles in the function of G protein-coupled receptors. Either beta-arrestin variant can function as a molecular chaperone for clathrin-mediated receptor internalization. This role depends primarily upon two distinct, contiguous C-terminal beta-arrestin motifs recognizing clathrin and the beta-adaptin subunit of AP2. However, a molecular basis is lacking to explain the different endocytic efficacies of the two beta-arrestin isoforms and the observation that beta-arrestin N-terminal substitution mutants can act as dominant negative inhibitors of receptor endocytosis. Despite the near identity of the beta-arrestins throughout their N termini, sequence variability is present at a small number of residues and includes tyrosine to phenylalanine substitutions. Here we show that corresponding N-terminal (Y/F)VTL sequences in beta-arrestin1 and -2 differentially regulate mu-adaptin binding. Our results indicate that the beta-arrestin1 Tyr-54 lessens the interaction with mu-adaptin and moreover is a Src phosphorylation site. A gain of endocytic function is obtained with the beta-arrestin1 Y54F substitution, which improves both the beta-arrestin1 interaction with mu-adaptin and the ability to enhance beta2-adrenergic receptor internalization. These data indicate that beta-arrestin2 utilizes mu-adaptin as an endocytic partner, and that the inability of beta-arrestin1 to sustain a similar degree of interaction with mu-adaptin may result from coordination of Tyr-54 by neighboring residues or its modification by Src kinase. Additionally, these naturally occurring variations in beta-arrestins may also differentially regulate the composition of the signaling complexes organized on the receptor.