Bovine anterior pituitary glands were fractionated by differential centrifugation. T4 5'-monodeiodination to T3 was found predominantly in microsomal fractions (M2; 105,000 . g pellet) enriched in glucose-6-phosphatase and 5'-nucleotidase activities. T4 5'-deiodinase activity in M2 fraction was 85.2 fmol T3/min X mg protein and represented an 8.5-fold enrichment over homogenate specific activity (10.6 fmol T3/min . mg protein). Further subcellular localization of the T4 5'-deiodinase was effected by discontinuous sucrose density gradient centrifugation. Maximum T4 5'-deiodinase activity was found in fraction P5 at the interface of densities 1.18/1.20 (200 fmol T3/min . mg protein) and correlated with the profile of glucose-6-phosphatase and not with that of 5'-nucleotidase, the maximum activity of which was recovered in fraction P1 at the interface of densities 1.03/1.12. Electron microscopic examination of the fractions confirmed that P5 contained in excess of 90% rough membranes in contrast to 10% or less in P1. Characterization of T4 5'-deiodinase activity was carried out in M2 preparations. The reaction was thiol dependent, requiring the presence of 50 mM dithiothreitol or more (Km, 38 mM), with a maximum velocity of 55-150 fmol T3/min . mg protein (n = 8). Enzyme activity was substrate dependent, with a Km for T4 between 35-70 nM. 5'-Monodeiodination of T4 was abolished by heating to 70 C for 30 min and was unaffected by EDTA. Propylthiouracil and methimazole did not inhibit T3 generation. Iopanoic acid, on the other hand, was a competitive inhibitor of the 5'-monodeiodination reaction, abolishing T3 production in a dose-dependent manner with a Ki of 3 microM. These data indicate that the bovine anterior pituitary contains significant T4 5'-deiodinase activity, which shares many properties of the type II 5'-deiodinase of the rat. Bovine anterior pituitary T4 5'-deiodinase appears to be predominantly localized in the rough endoplasmic reticulum.