T he goal of these studies was to define the rate-limiting steps in the inactivation of type 2 iodothyronine deiodinase (D2). We examined the effects of ATP depletion, a lysosomal protease inhibitor, and an inhibitor of actin polymerization on D2 activity in the presence or absence of cycloheximide or 3,3', 5'-triiodothyronine (reverse T3, rT3) in rat pituitary tumor cells (GH4C1). We also analyzed the effects of the proteasomal proteolysis inhibitor carbobenzoxy- L-leucyl-L-leucyl-L-leucinal (MG132). The half-life of D2 activity in hypothyroid cells was 47 min after cycloheximide and 60 min with rT3 (3 nM). rT3 and cycloheximide were additive, reducing D2 half-life to 20 min. D2 degradation was partially inhibited by ATP depletion, but not by cytochalasin B or chloroquine. Incubation with MG132 alone increased D2 activity by 30-40% for several hours, and completely blocked the cycloheximide- or rT3-induced decrease in D2 activity. These results suggest that D2 is inactivated by proteasomal uptake and that substrate reduces D2 activity by accelerating degradation through this pathway. This is the first demonstration of a critical role for proteasomes in the post-translational regulation of D2 activity.