The ubiquitous Ca2+-regulatory protein calmodulin activates target enzymes as a response to submicromolar Ca2+ increases in a background of millimolar Mg2+. The potential influence of Mg2+/Ca2+ competition is especially intriguing for the N-terminal domain of the protein which possesses the sites with the lowest Ca2+ specificity. The interdependence of Ca2+ and Mg2+ binding in the N-terminal domain of calmodulin was therefore studied using 43Ca NMR, 1H-15N NMR, and fluorescent Ca2+ chelator techniques. The apparent affinity for Ca2+ was found to be significantly decreased at physiological Mg2+ levels. At Ca2+ concentrations of an activated cell the (Ca2+)2 state of the N-terminal domain is therefore only weakly populated, indicating that for this domain Ca2+ binding is intimately associated with binding of target molecules. The data are in good agreement with a two-site model in which each site can bind either Ca2+ or Mg2+. The Mg2+-Ca2+ binding interaction is slightly positively allosteric, resulting in a significantly populated (Mg2+)1(Ca2+)1 state. The Ca2+ off-rate from this state is determined to be at least one order of magnitude faster than from the (Ca2+)2 state. These two findings indicate that the (Mg2+)1(Ca2+)1 state is structurally and/or dynamically different from the (Ca2+)2 state. The 43Ca quadrupolar coupling constant and the 1H and 15N chemical shifts of the (Mg2+)1(Ca2+)1 state were calculated from titration data. The values of both parameters suggest that the (Mg2+)1(Ca2+)1 state has a conformation more similar to the 'closed' apo and (Mg2+)2 states than to the 'open' (Ca2+)2 state.