Lithium is used in the prophylaxis of bipolar depressive disorder in augmentation treatment of depression and in the therapy of some cases of unipolar depression. Lithium affects cell function via its inhibitory action on adenosine triphosphatase (ATPase) activity, cyclic adenosine monophosphate (cAMP), and intracellular enzymes. The inhibitory effect of lithium on inositol phospholipid metabolism affects signal transduction and may account for part of the action of the cation in manic depression. Lithium also alters the in vitro response of cultured cells to thyrotropin-releasing hormone (TRH) and can stimulate DNA synthesis. Lithium is concentrated by the thyroid and inhibits thyroidal iodine uptake. It also inhibits iodotyrosine coupling, alters thyroglobulin structure, and inhibits thyroid hormone secretion. The latter effect is critical to the development of hypothyroidism and goiter. Effects on brain deiodinase enzymes and alterations in thyroid hormone receptor concentration in the hypothalamus are under investigation in relation to the therapeutic effect of lithium. The ion affects many aspects of cellular and humoral immunity in vitro and in vivo. This accounts for a rise in antithyroid antibody titer in patients having these antibodies before lithium administration whereas there is no induction of thyroid antibody synthesis de novo. Goiter, due to increased thyrotropin (TSH) after inhibition of thyroid hormone release, occurs at various reported incidence rates from 0%-60% and is smooth and nontender. Subclinical and clinical hypothyroidism due to lithium is usually associated with circulating anti-thyroid peroxidase (TPO) antibodies but may occur in their absence. Iodine exposure, dietary goitrogens, and immunogenetic background may all contribute to the occurrence of goiter and hypothyroidism during long-term lithium therapy. It is currently unclear whether the reported association of lithium therapy and hyperthyroidism are causal, although there is suggestive epidemiological evidence. Finally, lithium therapy is associated with exaggerated response of both TSH and prolactin to TRH in 50%-100% of patients, although basal levels are not usually high. It is probable that the hypothalamic pituitary axis adjusts to a new setting in patients receiving lithium.