Iodothyronine deiodinases (D1, D2, and D3) comprise a family of selenoproteins that are involved in the conversion of thyroxine (T(4)) to active triiodothyronine (T(3)), and also the inactivation of both thyroid hormones. The deiodinase enzymes are of critical importance for the normal development and function of the central nervous system. D1 is absent from the human brain, suggesting that D2 and D3 are the two main enzymes involved in the maintenance of thyroid hormone homeostasis in the central nervous system, D2 as the primary T(3)-producing enzyme, and D3 as the primary inactivating enzyme. While the coordinated action of D2 and D3 maintain constant T(3) levels in the cortex independently from the circulating thyroid hormone levels, the role of deiodinases in the hypothalamus may be more complex, as suggested by the regulation of D2 activity in the hypothalamus by infection, fasting and changes in photoperiod. Tanycytes, the primary source of D2 activity in the hypothalamus, integrate hormonal and probably neuronal signals, and under specific conditions, may influence neuroendocrine functions by altering local T(3) tissue concentrations. This function may be of particular importance in the regulation of the hypothalamic-pituitary-thyroid axis during fasting and infection, and in the regulation of appetite and reproductive function. Transient expression of D3 in the preoptic region during a critical time of development suggests a special role for this deiodinase in sexual differentiation of the brain.