Thyroids of rats fed an iodine-deficient diet for several months contain small psammoma bodies within the follicular lumens which concentrate radioactive iodine. If the iodine-deficient rats are fed a high-iodine diet to produce a "colloid goiter" with reaccumulation of PAS-positive colloid around the psammoma bodies before administering radioactive iodine, the radioactivity is present in follicular cells, around the psammoma bodies and in the colloid 24 hours after radioactive iodine administration. Propylthiouracil (PTU) causes radioactivity to disappear from the cells and colloid but does not produce any appreciable discharge of radioactivity from the psammoma bodies. If radioactive iodine is given to the iodine-deficient rats before feeding a high-iodine diet, radioactivity is initially present chiefly in the cells and psammoma bodies and gradually accumulates in the PAS-positive colloid as this becomes deposited under the influence of the increased dietary iodine. If such rats are fed PTU for 4 days before the high-iodine diet is instituted, radioactivity remains limited almost entirely to the psammoma bodies and does not appear in the accumulating colloid. It is concluded that the psammoma bodies are iodinated directly, rather than forming a nidus for condensation of intrafollicular thyroglobulin after it is iodinated. Although iodine is readily bound to the psammoma bodies, it apparently is not easily removed from these structures under in vivo conditions.