Thyroid hormones have important actions in the developing central nervous system. We describe here a novel action of thyroid hormone and its nuclear receptors on maturation of cerebellar gamma-aminobutyric acid (GABA)-ergic interneurons from their precursor cells. In rats, the density of GABAergic terminals in the cerebellum was decreased by hypothyroidism, as shown by immunohistochemistry for the GABA transporter GAT-1. This was due, at least partially, to a decreased number of GABAergic cells, because the number of Golgi II cells in the internal granular layer was decreased. GABAergic interneurons in the cerebellum differentiate from precursors expressing the Pax-2 transcription factor, generated in the subventricular zone of the embryonic fourth ventricle from where they migrate to the cerebellum. Hypothyroidism caused both decreased proliferation and delayed differentiation of precursors, with the net effect being an accumulation of immature cells during the neonatal period. The contribution of thyroid hormone receptors was studied by treating hypothyroid rats with T(3) or with the thyroid hormone receptor (TR) beta-selective agonist GC-1. Whereas treatment with T(3) reduced the number of precursors to control levels, GC-1 had only a partial effect, indicating that both TRalpha1 and TRbeta mediate the actions of T(3). Deletion of TRalpha1 in mice decreased cerebellar GAT-1 expression and Pax-2 precursor cell proliferation. It is concluded that thyroid hormone, acting through the nuclear receptors, has a major role in the proliferation and further differentiation of the Pax-2 precursors of cerebellar GABAergic cells.