For over 100 years, thyroid hormones have been known to be essential for neonatal neurodevelopment but whether they are required by the foetal brain remains a matter of controversy. For decades, the prevailing view was that thyroid hormones are not necessary until after birth because circulating levels in the foetus are very low and the placenta forms an efficient barrier to their transfer from the mother. Clinical observations of good neurological outcome following early treatment of congenital hypothyroidism were used to support the view that thyroid hormones are not required early in neurodevelopment. Nevertheless, the issue remained contentious because of findings that the severity of foetal neurological deficit due to maternal iodine deficiency correlated with the degree of maternal thyroxine (T4) deficiency. Furthermore, neurological damage in these cases could be prevented by correction of maternal T4 deficiency before mid-gestation. This observation led to the opposing view, supported by epidemiological studies of neurological cretinism, that maternal thyroid hormones are important and necessary for early foetal neurodevelopment. It is now clear that thyroid hormones are essential for both foetal and post-natal neurodevelopment and for the regulation of neuropsychological function in children and adults. In recent years, this controversial subject has progressed very rapidly following remarkable progress in understanding of the molecular mechanisms of thyroid hormone action. This article reviews the contributions of molecular biology and genetics to our new understanding of the physiological effects of thyroid hormones on neurodevelopment and in the adult brain.