Two types of iodothyronine deiodinase (ID-I and ID-II) catalyse the 5'-deiodination of thyroxine (T4) to produce the biologically active triiodothyronine (T3). Under normal circumstances ID-I in liver and kidney provides the main source of T3 to the circulation, whilst ID-II is largely responsible for local T3 production in the CNS, brown adipose tissue and pituitary. In some circumstances ID-II in brown adipose tissue and ID-I in the thyroid may provide a significant source of plasma T3, and ID-I in the pituitary may be important for local T3 production in this gland. The IDs thus play a pivotal role in controlling the supply of T3 to the nuclear receptors. ID-I is a selenoenzyme and, although ID-II activity is reduced in selenium deficiency, this is a consequence of increased plasma T4 concentration, rather than ID-II activity being directly dependent on selenium. Changes in 5'-deiodination occur in a number of situations such as poor nutrition, illness, iodine and selenium deficiency, and drug therapy. In iodine deficiency these changes appear to have evolved to ensure that the plasma T3 level is maintained and also to provide the brain with a degree of protection from hypothyroxinaemia. Relatively little is known about the importance of selenium deficiency on thyroid function in humans but, in combination with iodine deficiency, selenium deficiency may prove to be a contributing factor in the pathogenesis of myxodematous cretinism. The changes that occur in ID-I and ID-II in illness produce abnormalities in thyroid function tests which, although of no direct clinical significance, may lead to interpretative problems.