In order for 3,5,3'-triiodothyronine (T3) to mediate its biological effects, the pro-hormone thyroxine (T4) must be activated by removal of an outer-ring iodine by the type 1 or 2 deiodinases (D1 and D2), with about 60% of the daily T3 production in rodents being produced extrathyroidally via this pathway. To further define the role of these enzymes in thyroid hormone homeostasis, we backcrossed the targeted disruption of the Dio2 gene into C3H/HeJ (C3H) mice with genetically low D1 expression to create the C3H-D2KO mouse. Remarkably, these mice maintain euthyroid serum T3 levels, with normal growth and no decrease in expression of hepatic T3-responsive genes. However, serum T4 is increased 1.2-fold relative to the already elevated C3H levels, and serum TSH is increased 1.4-fold. Despite these increases, thyroidal ¹²⁵I uptake indicates no difference in thyroidal activity between C3H-D2KO and C3H mice. While C3H-D2KO hepatic and renal D1 activities were well below those observed in wild-type mice (0.1-fold for both), they were 8-fold and 2-fold higher respectively relative to C3H mice. Thyroidal D1, and cerebral cortical type 3 deiodinase activity (D3) were unchanged between C3H-D2KO and C3H mice. In conclusion, C3H-D2KO mice have notably elevated serum T4 levels, and this, in conjunction with residual D1 activity, is likely to an important role in the maintenance of euthyroid serum T3 concentrations.