ITIM-containing receptors play an essential role in modulating immune responses. Leukocyte-associated inhibitory receptor (LAIR)-1, also known as CD305, is an ITIM-containing inhibitory receptor, expressed by all leukocytes, that binds collagens. In this article, we investigate the effect of a conservative R65K mutation on LAIR-1 ligand binding and function. Compared with LAIR-1 wild-type (wt)-expressing cells, LAIR-1 R65K cells show markedly reduced binding to collagen, which correlates with a reduced level of LAIR-1 polarization to the site of interaction with collagens. Both LAIR-1 wt and R65K cells can generate intracellular signals when ligated by anti-LAIR-1 mAb, but only LAIR-1 wt cells respond to collagens or matrigel. In agreement, surface plasmon resonance analyses showed that LAIR-1 R65K protein has markedly reduced avidity for collagen type I compared with LAIR-1 wt. Likewise, LAIR-1 R65K protein has decreased avidity for cells expressing transmembrane collagen XVII. Thus, a single residue, Arg65, is critical for the interaction of LAIR-1 with collagens.