Considerable indirect evidence suggests that the type 2 deiodinase (D2) generates T3 from T4 for local use in specific tissues such as pituitary, brown fat, and brain, and studies with a D2-deficent mouse, the D2 knockout (D2KO) mouse, have shown this to be the case in pituitary and brown fat. The present study employs the D2KO mouse to determine the role of D2 in the developing brain. As expected, the T3 content in the neonatal D2KO brain was markedly reduced to a level comparable with that seen in the hypothyroid neonatal wild-type mouse. However, the mRNA levels of several T3-responsive genes were either unaffected or much less affected in the brain of the D2KO mouse than in that of the hypothyroid mouse, and compared with the hypothyroid mouse, the D2KO mouse exhibited a very mild neurological phenotype. The current view of thyroid hormone homeostasis in the brain dictates that the T3 present in neurons is generated mostly, if not exclusively, from T4 by the D2 in glial cells. This view is inadequate to explain the findings presented herein, and it is suggested that important compensatory mechanisms must be in play in the brain to minimize functional abnormalities in the absence of the D2.