Mammalian circadian rhythms are generated by a transcription-based feedback loop in which CLOCK:BMAL1 drives transcription of its repressors (PER1/2, CRY1/2), which ultimately interact with CLOCK:BMAL1 to close the feedback loop with ~24 hr periodicity. Here we pinpoint a key difference between CRY1 and CRY2 that underlies their differential strengths as transcriptional repressors. Both cryptochromes bind the BMAL1 transactivation domain similarly to sequester it from coactivators and repress CLOCK:BMAL1 activity. However, we find that CRY1 is recruited with much higher affinity to the PAS domain core of CLOCK:BMAL1, allowing it to serve as a stronger repressor that lengthens circadian period. We discovered a dynamic serine-rich loop adjacent to the secondary pocket in the photolyase homology region (PHR) domain that regulates differential binding of cryptochromes to the PAS domain core of CLOCK:BMAL1. Notably, binding of the co-repressor PER2 remodels the serine loop of CRY2, making it more CRY1-like and enhancing its affinity for CLOCK:BMAL1.