Binding of [125I]rT3 to rat liver nuclear extracts prepared in 0.25 M sucrose could be abolished by a prior wash of the nuclei with 2.4 M sucrose. Analysis of mixtures containing [125I]rT3 and nuclear extracts (0.25 M sucrose) showed that after incubation for 2 h at 22 degrees C, degradation of rT3 into 3,3'-T2 and I- had taken place. It appears that the presence of 125I- in these mixtures can account for the previously observed 'binding' of [125I]rT3 to these nuclear extracts. Further characterization of the deiodination process in nuclear extracts showed: 1) inactivation by heating, 2) production of equimolar amounts of I- and 3,3'-T2, 3) stimulation by sulfhydryl compounds and inhibition by propylthiouracil in a fashion similar to the microsomal iodothyronine 5'-deiodinase (ping-pong mechanism). We conclude that the observed deiodination of rT3 in hepatic nuclear extracts is of enzymatic nature, due to contamination of the nuclear preparation by microsomal iodothyronine 5'-deiodinase. However, since the nuclei are prepared in the presence of the non-ionic detergent Triton X-100, a nucleus associated deiodinase activity cannot be totally excluded.