Iodine plays a central role in thyroid physiology, being both a major constituent of thyroid hormones (THS) and a regulator of thyroid gland function. This review concerns those aspects of thyroid physiology in which significant advances have been made in recent years. We have known for decades that the thyroid gland concentrates iodine (I-) against an electrochemical gradient by a carrier-mediated mechanism driven by ATP. A similar I- uptake mechanism is found in other organs, including salivary glands, stomach, choroid plexus, and mammary glands, but only in the thyroid does TSH regulate the process. This past year saw a major advance with the cloning of the thyroid I- transporter. This development opens the way to an elucidation of the regulation of I- transport in the normal gland and in thyroid neoplasms that lack this property ("cold" nodules). All of the subsequent steps in TH biosynthesis, from oxidation and organification of iodide to the secretion of T4 and T3 into the circulation, are stimulated by TSH and inhibited by excess iodine. Recently, some of the regulatory mechanisms have been clarified. The function of the major TH-binding proteins in plasma is to maintain an equilibrium between extracellular and cellular hormone pools. Transthyretin, the principal T4-binding protein in cerebrospinal fluid, may play a similar role in the central nervous system. Although it generally is agreed that cellular uptake of TH is a function of the unbound (free) form of the hormone, there is evidence that certain TH-binding plasma proteins (i.e., apolipoproteins) may serve specific transport functions. The intracellular concentration of T3, the active TH, is determined by the rates of cellular uptake of T4 and T3, the rates of metabolic transformation, including conversion of T4 to T3, and the rate of T3 efflux. The latter has been assumed to be a passive process. However, recent studies by our group in San Francisco have shown that T3 is transported out of cells by a specific, saturable, verapamil-inhibitable mechanism. This T3 efflux system is widespread among cells from many tissues, and, at least in liver, modulates intracellular and nuclear concentration of the hormone and thereby influences TH action.