To elucidate the regulatory mechanism of ontogenetic development of iodothyronine-5'-deiodinase in the fetal and neonatal period, fetal mouse liver of the 19th day of gestation, in which no iodothyronine-5'-deiodinating activity was detectable, was cultured in Dulbecco-Vogt medium supplemented with 10% thyroid hormone-depleted fetal calf serum, insulin, hydrocortisone, and thyroid hormones. Iodothyronine-5'-deiodinating activity of the homogenate was assessed by the amount of iodide released from outer-ring-labeled reverse T3 and expressed as picomoles of 127I- per milligram of protein per minute. The enzyme activity was induced in a dose-dependent manner; optimal concentrations for insulin, hydrocortisone, and thyroxine were 1 microgram/ml, 0.4 microgram/ml, and 10(-6) M, respectively. Without supplementation of either hydrocortisone or thyroxine, no 5'-deiodination was detected. The enzyme activity was observed after 3 d of culture, peaked at days 14-20, and then gradually decreased. Lineweaver-Burk analysis revealed that the increase in activity was primarily due to an increase in Vmax (day 3, 0.2 pmol/mg protein per min; day 20, 2.5 pmol/mg protein per min). Half maximal thyroxine (T4) and triiodothyronine (T3) concentrations were 1 X 10(-7) M (free T4: 4 X 10(-10) M), and 2 X 10(-9) M (free T3: 5.0 X 10(-11) M), respectively, whereas reverse T3 did not elicit any activity at 10(-8)-10(-6) M. These results suggest that ontogenetic development of iodothyronine-5'-deiodinase in the liver of the fetal and neonatal mouse is induced by physiological concentrations of glucocorticoid and thyroid hormones, and that insulin plays a permissive role in enhancing T3 formation from T4 in the liver.