Thyroxine (T₄) needs to be converted to 3,5,3'-triiodothyronine (T₃) by iodothyronine deiodinase to exert its biological activity. Recent studies revealed the presence of type 2 iodothyronine deiodinase (D2) in human thyroid tissue, human skeletal muscle and other tissues, suggesting that D2 is involved in maintaining plasma T₃ level in human. Tumor necrosis factor α (TNFα) is an inflammatory cytokine of which production is elevated in patients with nonthyroidal illness. Although several lines of evidence suggest the causal role of TNFα in nonthyroidal illness, detailed nature of the effect of TNFα on D2 remains unclear. In the present study, we identified D2 activity and D2 mRNA in TCO-1 cells, which were derived from human anaplastic thyroid carcinoma, and studied the mechanisms involved in the regulation of D2 expression by TNFα. The characteristics of the deiodinating activity in TCO-1 cells were compatible with those of D2 and Northern analysis demonstrated that D2 mRNA was expressed in TCO-1cells. D2 activity and D2 mRNA expression were rapidly increased by dibutyryl cAMP ((Bu)₂cAMP). TNFα showed an inhibitory effect on (Bu)₂cAMP-stimulated D2 activity in spite of little effect on (Bu)₂cAMP-stimulated D2 mRNA expression. MG132, a proteasome inhibitor abolished TNFα suppression of D2 activity whereas BAY11-7082 or 6-amino-4-(4-phenoxyphenylethylamino) quinazoline, inhibitors of nuclear factor-κB (NF-κB) failed to attenuate the effect of TNFα on D2 activity. These data suggest that a posttranslational mechanism through proteasomal degradation but not NF-κB activation is involved in the suppression of D2 by TNFα.