Significant progress has been made in our understanding of the mechanisms leading to autoimmune thyroid diseases (AITD). For the first time, we are beginning to unravel these mechanisms at the molecular level. AITD, including Graves' disease (GD) and Hashimoto's thyroiditis (HT), are common autoimmune diseases affecting the thyroid. They have a complex etiology that involves genetic and environmental influences. Seven genes have been shown to contribute to the etiology of AITD. The first AITD gene discovered, HLA-DR3, is associated with both GD and HT. More recently, this association was dissected at the molecular level when it was shown that substitution of the neutral amino acids Ala or Gln with arginine at position beta 74 in the HLA-DR peptide binding pocket is the specific sequence change causing AITD. Non-MHC genes that confer susceptibility to AITD can be classified into two groups: (1) immune-regulatory genes (e.g., CD40, CTLA-4, and PTPN22); (2) thyroid-specific genes-thyroglobulin and TSH receptor genes. These genes interact with environmental factors, such as infection, likely through epigenetic mechanisms to trigger disease. In this review, we summarize the latest findings on disease susceptibility and modulation by environmental factors.