The interaction of IFN-β with its receptor IFNAR1 is vital for host-protective anti-viral and anti-proliferative responses, but signaling via this interaction can be detrimental if dysregulated. While it is established that IFNAR1 is an essential component of the IFNAR signaling complex, the key residues underpinning the IFN-β-IFNAR1 interaction are unknown. Guided by the crystal structure of the IFN-β-IFNAR1 complex, we used truncation variants and site directed mutagenesis to investigate domains and residues enabling complexation of IFN-β to IFNAR1. We have identified an interface on IFNAR1-subdomain (SD)-3 that is differentially utilized by IFN-β and IFN-α for signal transduction. We used surface plasmon resonance and cell-based assays to investigate this important IFN-β binding interface which is centered on IFNAR1 tyrosine residues Y240 and Y274 binding the C-terminal and N-terminal of B and C helices of IFN-β, respectively. Using IFNAR1 and IFN-β variants, we show that this interface contributes significantly to the affinity of IFN-β for IFNAR1, its ability to activate STAT1, the expression of interferon stimulated genes and ultimately to the anti-viral and anti-proliferative properties of IFN-β. These results identify a key interface created by IFNAR1 residues Y240 and Y274 interacting with IFN-β residues F63, L64, E77, T78, V81, R82 that underlie IFN-β-IFNAR1 mediated signaling and biological processes.