T(4), the main product of thyroid secretion, is a critical signal in plasma that mediates the TSH-negative feedback mechanism. As a prohormone, T(4) must be converted to T(3) to acquire biological activity; thus, type 2 iodothyronine deiodinase (D2) is expected to play a critical role in this feedback mechanism. However, the mechanistic details of this pathway are still missing because, counterintuitively, D2 activity is rapidly lost in the presence of T(4) by a ubiquitin-proteasomal mechanism. In the present study, we demonstrate that D2 and TSH are coexpressed in rat pituitary thyrotrophs and that hypothyroidism increases D2 expression in these cells. Studies using two murine-derived thyrotroph cells, TtT-97 and TalphaT1, demonstrate high expression of D2 in thyrotrophs and confirm its sensitivity to negative regulation by T(4)-induced proteasomal degradation of this enzyme. Despite this, expression of the Dio2 gene in TalphaT1 cells is higher than their T(4)-induced D2 ubiquitinating capacity. As a result, D2 activity and net T(3) production in these cells are sustained, even at free T(4) concentrations that are severalfold above the physiological range. In this system, free T(4) concentrations and net D2-mediated T(3) production correlated negatively with TSHbeta gene expression. These results resolve the apparent paradox between the homeostatic regulation of D2 and its role in mediating the critical mechanism by which T(4) triggers the TSH-negative feedback.