Activation of discoidin domain receptor (DDR) 1 by collagen is reported to regulate cell migration and survival processes. While the oligomeric state of DDR1 is reported to play a significant role in collagen binding, not much is known about the effect of collagen binding on DDR1 oligomerization and cellular distribution. Using fluorescence resonance energy transfer (FRET) microscopy, we monitored the interaction between DDR1 tagged with cyan fluorescent protein and DDR1 tagged with yellow fluorescent protein in live cells. Significant FRET signal indicative of receptor dimerization was found even in the absence of collagen stimulation. Collagen stimulation induced aggregation of DDR1, followed by a sharp increase in FRET signal, localized in the regions of aggregated receptor. Further analysis of DDR1 aggregation revealed that DDR1 undergoes cytoplasmic internalization and incorporation into the early endosome. We found the kinetics of DDR1 internalization to be fast, with a significant percentage of the receptor population being internalized in the first few minutes of collagen stimulation. Our results indicate that collagen stimulation induces the aggregation and internalization of DDR1 dimers at timescales much before receptor activation. These findings provide new insights into the cellular redistribution of DDR1 following its interaction with collagen type I.