The deiodinase family of enzymes mediates the activation and inactivation of thyroid hormone. The role of these enzymes in the regulation of the systemic concentrations of thyroid hormone is well established and underpins the treatment of common thyroid diseases. Interest in this field has increased in the past 10 years as the deiodinases became implicated in tissue development and homeostasis, as well as in the pathogenesis of a wide range of human diseases. Three deiodinases have been identified, namely, types 1, 2 and 3 iodothyronine deiodinases, which differ in their catalytic properties and tissue distribution. Notably, the expression of these enzymes changes during the lifetime of an individual in relation to the different needs of each organ and to ageing. The systemic homeostatic role of deiodinases clearly emerges during changes in serum concentrations of thyroid hormone, as seen in patients with thyroid dysfunction. By contrast, the role of deiodinases at the tissue level allows thyroid hormone signalling to be finely tuned within a given cell in a precise time-space window without perturbing serum concentrations of thyroid hormone. This Review maps the overall functional role of the deiodinases and explores challenges and novel opportunities arising from the expanding knowledge of these 'master' components of the thyroid homeostatic system.