Studies of placental inner-ring deiodination of T4 were carried out in pregnant guinea pigs, by in situ placental perfusion. When [131I]T4 and [125I]rT3 were administered to the mother, the ratio of fetal side to maternal side [131I]rT3 was more than 10 times greater than the corresponding ratio for [125I]rT3. When radiolabeled T4 was supplied to the fetal side of the placenta in perfusion fluid, and the perfusate recycled through the placental circuit, there was a progressive increase in labeled rT3 concentration in the perfusate. These results indicate that the guinea pig placenta actively deiodinates both maternal and fetal T4 in the inner ring in vivo. We found evidence of very little outer ring deiodination of either T4 or rT3. The quantitative contribution of placental deiodination of maternal T4 to circulating rT3 in the fetus appears to be small; however, placental deiodination of fetal T4 (about 0.5 nmol/kg fetal BW X day) could contribute significantly to fetal rT3 levels. Our observations are consistent with the hypothesis that placental inner-ring deiodination of T4 plays a part in the regulation of fetal iodothyronine metabolism.