α-dystroglycan is a highly O-glycosylated extracellular matrix receptor that is required for anchoring of the basement membrane to the cell surface and for the entry of Old World arenaviruses into cells. Like-acetylglucosaminyltransferase (LARGE) is a key molecule that binds to the N-terminal domain of α-dystroglycan and attaches ligand-binding moieties to phosphorylated O-mannose on α-dystroglycan. Here we show that the LARGE modification required for laminin- and virus-binding occurs on specific Thr residues located at the extreme N terminus of the mucin-like domain of α-dystroglycan. Deletion and mutation analyses demonstrate that the ligand-binding activity of α-dystroglycan is conferred primarily by LARGE modification at Thr-317 and -319, within the highly conserved first 18 amino acids of the mucin-like domain. The importance of these paired residues in laminin-binding and clustering activity on myoblasts and in arenavirus cell entry is confirmed by mutational analysis with full-length dystroglycan. We further demonstrate that a sequence of five amino acids, Thr(317)ProThr(319)ProVal, contains phosphorylated O-glycosylation and, when modified by LARGE is sufficient for laminin-binding. Because the N-terminal region adjacent to the paired Thr residues is removed during posttranslational maturation of dystroglycan, our results demonstrate that the ligand-binding activity resides at the extreme N terminus of mature α-dystroglycan and is crucial for α-dystroglycan to coordinate the assembly of extracellular matrix proteins and to bind arenaviruses on the cell surface.