We studied the characteristics of monodeiodination of thyroxine to T3 and reverse T3 in the human placenta which was obtained at normal delivery. The placentas were homogenized in cold sucrose Tris-HCl buffer, pH 7.5. The microsomal fraction was incubated at 37 degrees C in the air for 1 hr with 2 micrograms of T4 in the presence of 0.05 M DTT. The T3 and reverse T3 generated in the reaction mixture were extracted into cold ethanol and measured by RIA. Among the usual subcellular fractions of the placental homogenate, microsomes were most potent in deiodinating T4 to reverse T3, 17.9 ng/mg protein/micrograms T4/60 min. In microsome, production of reverse T3 from T4 was dependent upon protein concentration, incubation temperature, incubation time, pH and T4 concentration, and unstable to prior heating of the microsomal fraction. The production of T3 from T4 was negligible in the present system. Degradation of T3 in the human placenta was rapid. Although addition of anti-T3 antibody to the reaction mixture suppressed the degradation of T3, it had no effect on the net production of T3, suggesting that the obtained net T3 production rate had not been influenced by its degradation. Degradation of reverse T3 was negligible. These results indicate that the human placenta actively deiodinates T4 to reverse T3 enzymatically. This enzyme system might have some influence on the transplacental passage of thyroid hormone from the mother to the fetus.