There is extensive deiodinative metabolism of thyroxine (T4) in thyroid hormone target organs, including the pituitary and brain. In both rat and man, most of the 3,3’,5-triiodothyronine (T3) in the body is produced outside the thyroid gland by deiodination of T4. T3 is the principal active form of thyroid hormone within cells. In the rat, there are at least three enzymatic iodothyronine-deiodinating pathways which can be distinguished by kinetics and substrate and inhibitor specificities. Two of these (types I and II) can convert T4 to T3.The third pathway (type III) converts T4 to the inactive reverse-T3 and T3 to an inactive diiodothyronine. Both the anterior pituitary and the brain produce most of their intracellular T3 locally, by the type-II pathway. Type-Ill activity is present throughout the brain, but not in the anterior pituitary. Studies in the rat, using the deiodination inhibitor iopanoic acid, show that the capacities of T4 to inhibit thyrotropin release and stimulate growth hormone synthesis require conversion of T4 to T3 in the pituitary. Studies in man strongly suggest that the same is true in the human adenohypophysis, and a syndrome in man of a deficiency in this process possibly exists. The hypothalamus exhibits some responses to thyroid hormone, including changes in somatostatin and substance P content and changes in activities of type-II and III deiodination. The mechanism(s) of action of thyroid hormone in the hypothalamus, and in the brain in general, are not yet well understood. Speculations are advanced that modulation of type-II deiodination in the pituitary and hypothalamus could serve as a defense against thyroid hormone deficiency, that type-Ill deiodination could act together with type-II deiodination to control brain T3 content, and that local reverse-T3 production in the brain by the type-III pathway might have some, as yet unidentified, physiological significance. Further work in this field is likely to elucidate both mechanisms of control of pituitary hormone secretion and mechanisms of action of thyroid hormone.