Thyroid hormones (TH) are essential for normal growth and development in vertebrates, and are important for the maintenance of normal metabolic activity in most tissues of the body. Because the actions of TH result from the binding of 3,3',5'-triiodothyronine (T₃) to specific nuclear receptors in the target cell, the extent of TH action in a given cell is dependent in part on the intracellular concentration of T₃. The type 3 deiodinase (D3) is a selenoenzyme that inactivates TH by catalyzing their conversion to biologically inactive metabolites. The findings that D3 activity is very high in the pregnant uterus and fetoplacental unit, and that D3-deficient mice exhibit deficits in growth, viability, and fertility strongly suggest that D3 plays an important role in development. The D3 gene (Dio3) is preferentially expressed from the paternally inherited allele and is associated with an overlapping gene transcribed from the opposite DNA strand (Dio3os). D3 mRNA expression and D3 activity are regulated by a number of hormones and growth factors as well as by genomic imprinting. Although some genomic structures appear to mediate some of these effects, many details concerning the function of the Dio3 gene are unresolved. These include the full characterization of the Dio3 and Dio3os genes, the elucidation of the mechanisms responsible for the developmental and tissue-specific patterns observed in Dio3 allelic expression, and the response of the genes to hormones and growth factors. Knowledge of these details will be important for understanding the physiologic function of an enzyme that appears to be critical for normal mammalian development.