Thyroid hormone (T4 and T3) concentrations in target tissues are greatly influenced by the activity of iodothyronine deiodinases. Type 1 and 2 deiodinases generate T3 from T4, while deiodinase type 3 (D3) transforms T4 and T3 to inactive metabolites. Coordination of the expression and activity of these enzymes is postulated to play an important role in physiology and development, making it possible that individual cells and tissues regulate the concentrations of the active hormone according to specific needs. We have analyzed the expression of D3 in the neonatal rat brain by in situ hybridization using a specific 35S-labelled riboprobe. At postnatal day 0 D3 transcripts were unexpectedly found to be selectively expressed in areas involved in sexual differentiation of the brain such as the bed nucleus of the stria terminalis and preoptic nuclei. Expression in these areas was transient and was no longer observed at postnatal day 10. These observations suggest that D3 expression is linked to the early mechanism determining sexual function and behavior.