The interaction between the hormone hepcidin and the iron exporter ferroportin (Fpn) regulates plasma iron concentrations. Hepcidin binds to Fpn and induces its internalization and degradation, resulting in decreased iron efflux from cells into plasma. Fpn mutations in N144, Y64N, and C326 residue cause autosomal dominant disease with parenchymal iron overload, apparently due to the resistance of mutant Fpn to hepcidin-mediated internalization. To define the mechanism of resistance, we generated human Fpn constructs bearing the pathogenic mutations. The mutants localized to the cell surface and exported iron normally, but were partially or completely resistant to hepcidin-mediated internalization and continued to export iron despite the presence of hepcidin. The primary defect with exofacial C326 substitutions was the loss of hepcidin binding, which resulted in the most severe phenotype. The thiol form of C326 was essential for interaction with hepcidin, suggesting that C326-SH homology is located in or near the binding site of hepcidin. In contrast, N144 and Y64 residues were not required for hepcidin binding, but their mutations impaired the subsequent internalization of the ligand-receptor complex. Our observations explain why the mutations in C326 Fpn residue produce a severe form of hemochromatosis with iron overload at an early age.