We investigated the mechanism by which T₄ regulates its activation to T₃ by the type 2 iodothyronine deiodinase (D2). D2 is a short- lived (t_1/2 50 min), 31-kDa endoplasmic reticulum (ER) integral membrane selenoenzyme that generates intracellular T₃. Inhibition of the ubiquitin (Ub) activating enzyme, E1, or MG132, a proteasome blocker, inhibits both the basal and substrate-induced acceleration of D2 degradation. Using a catalytically active transiently expressed FLAG-tagged-NH₂-D2, we found rapid synthesis of high molecular mass (100–300 kDa) Ub-D2 conjugates that are catalytically inactive. Ub-D2 increases when cells are exposed to D2 substrate or MG132 and disappears rapidly after E1 inactivation. Fusion of FLAG epitope to the COOH terminus of D2 prolongs its half-life approximately 2.5-fold and increases the levels of active and, especially, Ub-D2. This indicates that COOH-terminal modification interferes with proteasomal uptake of Ub-D2 that can then be deubiquitinated. Interestingly, the type 1 deiodinase, a related selenoenzyme that also converts T₄ to T₃ but with a half-life of >12 h, is inactivated but not ubiquitinated or degraded after exposure to substrate. Thus, ubiquitination of the ER-resident enzyme D2 constitutes a specific posttranslational mechanism for T₄ regulation of its own activation in the central nervous system and pituitary tissues in which D2-catalyzed T₄ to T₃ conversion is the major source of intracellular T₃.