Congenital hypothyroidism affects about 1:3000 to 1:4000 infants and may be caused by defects in thyroidal ontogeny or hormone synthesis. The impressive advances in molecular genetics led to the characterization of numerous genes that are essential for normal development and hormone production of the hypothalamic-pituitary-thyroid axis. Mutations in many of these genes now provide a molecular explanation for a subset of the sporadic and familial forms of congenital hypothyroidism. Defects in one of the multiple steps required for normal hormone synthesis account for about 10% of cases with congenital hypothyroidism. They are typically recessive and therefore more common in inbred families. In the vast majority of patients, congenital hypothyroidism is sporadic and associated with thyroid dysgenesis, a spectrum of developmental defects, which includes the absence of detectable thyroid tissue, ectopic tissue, and thyroid hypoplasia. The molecular defects known to date only explain a minority of these cases and include mutations in the paired box transcription factor PAX8, and the thyroid transcription factors TTF1 and TTF2. It is likely that a further subset of patients with thyroid dysgenesis have defects in other transacting proteins or elements of the signaling pathways controlling growth and function of thyrocytes. In other instances, thyroid dysgenesis may be a polygenic disease or have a multifactorial basis. Aside from providing fundamental insights into the ontogeny and the pathophysiology of the thyroid, the characterization of the molecular basis of congenital hypothyroidism may have growing importance for genetic testing and counseling in the future.