Developmental dyslexia (DD) is one of the most common learning disorders, affecting millions of children and adults worldwide. To date, scientific research has attempted to explain DD primarily based on pathophysiological alterations in the cerebral cortex. In contrast, several decades ago, pioneering research on five post-mortem human brains suggested that a core characteristic of DD might be morphological alterations in a specific subdivision of the visual thalamus - the magnocellular LGN (M-LGN). However, due to considerable technical challenges in investigating LGN subdivisions non-invasively in humans, this finding was never confirmed in-vivo, and its relevance for DD pathology remained highly controversial. Here, we leveraged recent advances in high-resolution magnetic resonance imaging (MRI) at high field strength (7 Tesla) to investigate the M-LGN in DD in-vivo. Using a case-control design, we acquired data from a large sample of young adults with DD (n = 26; age 28 ± 7 years; 13 females) and matched control participants (n = 28; age 27 ± 6 years; 15 females). Each participant completed a comprehensive diagnostic behavioral test battery and participated in two MRI sessions, including three functional MRI experiments and one structural MRI acquisition. We measured blood-oxygen-level-dependent responses and longitudinal relaxation rates to compare both groups on LGN subdivision function and myelination. Based on previous research, we hypothesized that the M-LGN is altered in DD and that these alterations are associated with a key DD diagnostic score, i.e., rapid letter and number naming (RANln). The results showed aberrant responses of the M-LGN in DD compared to controls, which was reflected in a different functional lateralization of this subdivision between groups. These alterations were associated with RANln performance, specifically in male DD. We also found lateralization differences in the longitudinal relaxation rates of the M-LGN in DD relative to controls. Conversely, the other main subdivision of the LGN, the parvocellular LGN (P-LGN), showed comparable blood-oxygen-level-dependent responses and longitudinal relaxation rates between groups. The present study is the first to unequivocally show that M-LGN alterations are a hallmark of DD, affecting both the function and microstructure of this subdivision. It further provides a first functional interpretation of M-LGN alterations and a basis for a better understanding of sex-specific differences in DD with implications for prospective diagnostic and treatment strategies.