Arrested physical development and neurologic abnormalities were identified in 3 of 5 Rat Terrier puppies at 9 weeks of age. Bilaterally firm symmetrical masses were palpated in the region of the thyroid glands. Low serum total (T4) and free thyroxine (FT4, by equilibrium dialysis) and markedly elevated thyroid stimulating hormone (TSH) concentrations supported the diagnosis of hypothyroidism. At necropsy, the thyroid gland was grossly enlarged and histologically exhibited severe, diffuse hyperplasia of the follicular epithelium. Gross examination of the central nervous system revealed a myelin deficiency, most evident in the corpus callosum. Regional distribution of hypomyelination was confirmed histologically, affecting the corpus callosum and, to a lesser degree, the corona radiata, the longitudinal fibers of the pons, the pyramids, and the lateral funiculi of the spinal cord. Myelin reduction was paralleled by axon reduction, suggesting that hypomyelination was a consequence of reduced axonal formation. A homozygous nonsense mutation in the thyroid peroxidase gene was identified in the affected puppies. The dam and a clinically normal litter mate were heterozygous for this mutation, confirming simple autosomal recessive inheritance of the disease trait. The same mutation, causing congenital hypothyroidism with a goiter was previously described in the Toy Fox Terrier breed. Given the ongoing practice of introducing the Toy Fox Terrier genetic background into some Rat Terrier breeding programs to obtain a smaller stature and the apparent relative incidence of the disorder in the 2 breeds, it is likely that this mutation crossed into the Rat Terrier breed from Toy Fox Terriers fairly recently.