Recent studies have shown that ∼75% of the nuclear 3,5,3′-triiodothyronine (T3) present in adult rat cerebral cortex (Cx) derives from 5′-deiodination of thyroxine (T4) within this tissue. The activity of iodothyronine 5′-deiodinase (I 5′D), the enzyme catalyzing T4 to T3 conversion, increases rapidly after thyroidectomy, suggesting that this could be a compensatory response to hypothyroxinemia. To evaluate this possibility during the period of central nervous system maturation, we studied several thyroid hormone-responsive enzymes (aspartic transaminase [AT], succinic dehydrogenase [S.D.], and Na/K ATPase) in the Cx of 2-, 3-, and 4-wk-old rats. The rats were made congenitally hypothyroid by placing 1, 2, 5, and 20 mg methimazole (MMI) in 100 ml of the mothers' drinking water from day 16 of gestation throughout the nursing period and to the litters after weaning. In addition, serum thyroid hormones, I 5′D, and, in some experiments, in vivo T4 to T3 conversion in Cx were measured in the same pups. Serum T4 concentrations varied from <1 to 40 ng/ml and were generally inversely related to maternal MMI dose. Serum T3 was less affected by MMI than was T4. At 2 wk, decreases in AT, S.D., and ATPase were present in the 20-mg-MMI group but not in the 5-mg-MMI pups despite low serum T4 (<10 ng/ml) in the latter. At 3 and 4 wk, both 5- and 20-mg-MMI groups had significant reductions in these cortical enzymes despite a normal serum T3 in the 5-mg-MMI rats. Cortical I 5′D activity was 10-fold the control value in 5- and 20-mg-MMI animals at 2 wk but increased only three- to fivefold at 3 and 4 wk. I 5′D correlated inversely with serum T4 (r ≥ 0.96) at all ages, but the less marked elevation of this enzyme in 3- and 4-wk-old pups was not accompanied by an increase in serum T4. Serum T3 increased or remained the same between 2 and 3 wk. These results suggested that the 10-fold increase in I 5′D at 2 wk protected the 5-mg-MMI group from tissue hypothyroidism, but that the three- to fivefold increase at 3 and 4 wk could not. Injection of ∼250 ng T4/100 g body weight to 2-wk-old, 20-mg-MMI pups (one-sixth the normal T4 production rate) led to both a 1.8-ng/g cortical tissue increment in cortical T3 and a significant increase in AT at 24 h, compared with a 0.38-ng/g cortical tissue T3 increment and no change in AT in euthyroid controls. The larger increment in T3 of the 20-mg-MMI pups was due in great part to increased fractional T4 to T3 conversion. Although the latter resulted in greater serum T3 concentrations, three-fourths of the newly formed T3 in the cortex was generated in situ, and it was blocked by iopanoic acid as was the increase in AT. We conclude that 70-80% of the T3 in the Cx of the neonatal rat is produced locally. Serum T4 appears to serve both as a precursor for T3 and as a critical signal for increases in cortical I 5′D. The increased I 5′D can result in normal or near-normal cerebrocortical T3 concentrations despite marked reductions in serum T4. This mechanism seems to be particularly effective around 2 wk of age when many thyroid-hormone-dependent maturational changes occur in the rat Cx.