We have studied the ontogenesis of 5′-deiodinase (5′ D) activity in rat brain during fetal life, its capacity to respond to maternal or fetal hypothyroidism, and its regulation by maternal thyroid hormones. Type II 5′ D (5′ D-II) activity increases 4-fold during the period studied (17 to 22 days of gestation), mainly between days 19 and 21. Fetal brain T4 concentrations increase in parallel with fetal plasma T4, whereas fetal brain T3 concentrations increase 18 times (days 17–21), six times more than would have been expected from the small increase in fetal plasma T3 levels. Maternal thyroidectomy did not affect 5′ D-II activity or thyroid hormone concentrations in fetal brain (except brain T4 at 18 days of gestation). Fetal hypothyroidism, induced by giving a goitrogen (methimazole) to the mothers, depleted all fetal tissues studied, including the fetal thyroid, from thyroid hormones. By 19 days of gestation, the fetal brain was able to respond to hypothyroidism with a 3− to 5-fold increase in 5′ D-II activity. Earlier onset of treatment with methimazole led to 2− to 3-fold increases in 5′ D already at 17 and 18 days of gestation, showing that when fetal thyroid secretion starts the fetal brain 5′ D-II is able to respond to hypothyroidism. Replacement of methimazole-treated mothers with physiological doses of T4, given by constant infusion, increased T4 and T3 concentrations in fetal brain, and inhibited fetal, as well as maternal, brain 5′ D-II activity. But treatment of the mothers with T3 did not change T3 concentrations in the fetal brain, despite the increase in fetal plasma T3, and actually increased 5′ D-II in fetal brain. Maternal cerebral 5′ D-II was not inhibited by T3 treatment. Inverse relationships were found between the 5′ D-II and thyroid hormone concentrations in the fetal brain. These correlations were not identical for fetuses from thyroidectomized and control mothers. In fetuses from thyroidectomized dams, brain 5′ D-II is more sensitive to a decrease in brain T4 than in the progeny of control dams. The present results describe the developmental changes in rat cerebral 5′ D-II activity and its regulation by thyroid hormones. Although fetal plasma T3 is 10% of adult levels, T3 concentrations in fetal brain increase almost to adult levels, suggesting an important role of local T3 production from T4, and thus, of 5′ D-II in fetal brain. In addition, brain 5′ D-II responds to thyroid hormone deficiency and can be modulated by maternal thyroid hormones when the fetus is hypothyroid.