Mutations in the human bestrophin 1 (hBest1) chloride channel cause Best vitelliform macular dystrophy. Although mutations in its transmembrane domains were found to alter biophysical properties of the channel, the mechanism for disease-causing mutations in its N and C termini remains elusive. We hypothesized that these mutations lead to channel dysfunction through disruption of an N-C-terminal interaction. Here, we present data demonstrating that hBest1 N and C termini indeed interact both in vivo and in vitro. In addition, using a spectrum-based fluorescence resonance energy transfer method, we showed that functional hBest1 channels in the plasma membrane were multimers. Disease-causing mutations in the N terminus (R19C, R25C, and K30C) and the C terminus (G299E, D301N, and D312N) caused channel dysfunction and disruption of the N-C interaction. Consistent with the functional and biochemical results, mutants D301N and D312N clearly reduced fluorescence resonance energy transfer signal, indicating that the N-C interaction was indeed perturbed. These results suggest that hBest1 functions as a multimer in the plasma membrane, and disruption of the N-C interaction by mutations leads to hBest1 channel dysfunction.