A model incubation system containing purified thyroid peroxidase (TPO) was used to study the mechanism of action of the thioureylene anti-thyroid drugs--propylthiouracil (PTU), methylmercapto imidazole (MMI) and carbimazole. Two general types of experiments were performed: a) measurement of the inhibitory effects of the drugs on TPO-catalyzed iodination and on TPO-catalyzed oxidation of guaiacol, and b) studies of the metabolism of PTU and MMI by the TPO model system. The major observations can be summarized as follows: 1) The thioureylene drugs are potent inhibitors of TPO-catalyzed iodination of protein and tyrosine. Their potency increases greatly as the concentration of I- decreases. 2) The thioureylene drugs are also potent inhibitors of TPO-catalyzed oxidation of guaiacol, a reaction that does not involve iodide. 3) MMI and PTU are readily oxidized in the model incubation system when iodide is present but not in the absence of iodide. The rate of oxidation increased as the iodide concentration was increased from 10 to 100 muM. 4) Oxidation of PTU and MMI by the model incubation system is inhibited by relatively slight increases in the concentration of PTU and MMI. These drugs are capable of inhibiting their own and each other's metabolism. 5) Inhibition of iodination is competitively antagonized by iodide at low drug concentrations, but not at higher drug concentrations. 6) Inhibition of iodination by MMI and PTU may be either reversible (low ratio of drug to iodide), or irreversible (higher ratio of drug to iodide). In reversible inhibition the iodination is inhibited for a period which may be as brief as 2 min or as long as 20 min, but thereafter, iodination begins, and there is escape from inhibition. During the lag-period there is extensive metabolism of the drug. In the case of irreversible inhibition of iodination is inhibited completely or almost completely for 60 min, and drug oxidation during this period is relatively low. 7) Irreversible inhibition may be transformed into reversible inhibition by increasing the concentration of TPO or the concentration of iodide. However, increasing the concentration of H2O2 or of tyrosine does not overcome irreversible inhibition. On the basis of these findings and of current views concerning the mechanism of enzymatic iodination, a scheme is proposed for the mechanism of inhibition by thioureylene drugs of TPO-catalyzed iodination of protein and tyrosine.