Recognition of transient forms of neonatal hypothyroidism is difficult because of the urgency of thyroxine treatment. In the present report the first child born to a mother with Graves' disease developed transient hyperthyroidism during the newborn period. The mother underwent radioactive iodine treatment and was maintained euthyroid on l-thyroxine. Two subsequent children were detected by newborn thyroid screen to have low thyroxine and markedly elevated serum thyrotropin (TSH) levels. Technetium 99 metastable and iodine 123 scans at 22 days of age showed the second child to be athyreotic. The third child was not scanned. All three children were nongoitrous at birth. Patients 2 and 3 had continuous TSH suppression with thyroxine therapy for 3 and 4 years. Thyroid function measurements after discontinuation of therapy for 8 weeks were normal, and both children had normal 123I thyroid scans. The mother was found to have potent TSH-binding inhibitory immunoglobulin (TBII) levels in her serum (85.5%). A fourth child with low thyroxine and elevated TSH was born to a mother on a regimen of l-thyroxine for hypothyroidism. 99mTc scan at 26 days of age showed no thyroid tissue and was normal at 3 months. TBII activity was 35% in the maternal serum and absent in the infant's serum. The above laboratory and clinical data are compatible with the blocking nature of TBII, resulting in transient newborn hypothyroidism and an athyreotic appearance on scan. The TBII measurement can be a useful predictor of neonatal hypothyroidism as well as confirm the transient nature of the disease in newborns.