It has proved impossible to purify the three types of iodothyronine deiodinase to homogeneity by use of standard physiochemical techniques. However, using expression cloning with Xenopus oocytes, we were successful in isolating a cDNA coding for the rat type I iodothyronine deiodinase. An extremely puzzling aspect of this cDNA was an in-frame thymine-guanine-adenine (TGA) codon at position 126. By mutagenesis studies we showed that this coded for selenocysteine, consistent with the previously described requirement for selenium for hepatic and renal thyronine deiodination. The cloned enzyme can be expressed transiently in JEG, a human cell line, or COS, a monkey cell line, by gene-transfer techniques, and the expressed protein has the appropriate biochemical characteristics of type I iodothyronine deiodinase. These include a newly identified extreme sensitivity to competitive inhibition of reverse-3,5,3'-triiodothyronine (rT3) deiodination by gold. The identification of this elusive protein should prove helpful in understanding the process of thyroid hormone activation.