RT-PCR shows that mouse skeletal muscle contains type-2 iodothyronine deiodinase (D2) mRNA. However, the D2 activity has been hard to measure. Except for newborn mice, muscle homogenates have no detectable activity. However, we have reported D2 activity in mouse muscle microsomes. As the mRNA, activity is higher in slow- than in fast-twitch muscle. We addressed here the major problems in measuring D2 activity in muscle by: homogenizing muscle in high salt to improve yield of membranous structures; separating postmitochondrial supernatant between 38 and 50% sucrose, to eliminate lighter membranes lacking D2; washing these with 0.1 M Na(2)CO(3) to eliminate additional contaminating proteins; pretreating all buffers with Chelex, to eliminate catalytic metals; and eliminating the EDTA from the assay, as this can bind iron that enhances dithiothreitol oxidation and promotes peroxidation reactions. Maximum velocity of T(3) generation by postgradient microsomes from red muscles was approximately 1100 fmol/(h · mg) protein with a Michaelis-Menten constant for T(4) of 1.5 nM. D2-specific activity of Na(2)CO(3)-washed microsomes was 6-10 times higher. The enrichment in D2 activity increased in parallel with the capacity of microsomes to load (sarco/endoplasmic reticulum Ca(2+)-ATPase) and bind Ca(2+) (calsequestrin), indicating that D2 resides in the inner sarcoplasmic reticulum, close to the nuclei. The presence of D3 in the sarcolemma suggests that the most of D2-generated T(3) acts locally. Estimates from maximum velocity, Michaelis-Menten constant, and muscle T(4) content suggest that mouse red, type-1, aerobic mouse muscle fibers can generate physiologically relevant amounts of T(3) and, further, that muscle D2 plays an important role in thyroid hormone-dependent muscle thermogenesis.