The type 2 deiodinase (D2), a selenoenzyme that catalyzes the conversion of T4 to T3 via 5'-deiodination, is expressed in the pituitary, brain, brown adipose tissue (BAT), and the reproductive tract. To examine the physiological role of this enzyme, a mouse strain lacking D2 activity was developed using homologous recombination. The targeting vector contained the Neo gene in place of a 2.6-kb segment of the Dio2 gene. This segment comprises 72% of the coding region and includes the TGA codon that codes for the selenocysteine located at the active site of the enzyme. Mice homologous for the targeted deletion [D2 knockout (D2KO)] had no gross phenotypic abnormalities, and development and reproductive function appeared normal, except for mild growth retardation (9%) in males. No D2 activity was observed in any tissue in D2KO mice under basal conditions, or under those that normally induce this enzyme such as cold-exposure (BAT) or hypothyroidism (brain, BAT, and pituitary gland). Furthermore, no D2 activity was present in cultured astrocytes, nor could it be induced by treatment of the cells with forskolin. Although D2 mRNA transcripts were detected in BAT RNA obtained from cold-exposed wild-type (WT) mice, none was detected in BAT RNA from comparably-treated D2KO mice. Levels of D1 in the liver, thyroid, and pituitary were the same in WT and D2KO animals, whereas D3 activity in D2KO cerebrum was twice that in WT cerebrum. Serum T3 levels were comparable in adult WT and D2KO mice. However, serum T4 and TSH levels were both elevated significantly (40% and 100%, respectively) in the D2KO mice, suggesting that the pituitary gland of the D2KO mouse is resistant to the feedback effect of plasma T4. This view was substantiated by the finding that serum TSH levels in hypothyroid WT mice were suppressed by administration of either T4 or T3, but only T3 was effective in the D2KO mouse. The data also suggest that the clearance of T4 from plasma was reduced in the D2KO mouse. In summary, targeted inactivation of the selenodeiodinase Dio2 gene results in the complete loss of D2 activity in all tissues examined. The increased serum levels of T4 and TSH observed in D2KO animals demonstrate that the D2 is of critical importance in the feedback regulation of TSH secretion.