Timely and appropriate levels of thyroid hormone (TH) signaling are necessary to ensure normal developmental outcomes in many tissues. Studies using pharmacological models of altered TH status have revealed an influence of these hormones on testis development and size, but little is known about the role of endogenous determinants of TH action in the developing male gonads. Using a genetic approach, we demonstrate that the type 3 deiodinase (D3), which inactivates TH and protects developing tissues from undue TH action, is a key factor. D3 is highly expressed in the developing testis, and D3-deficient (D3KO) mice exhibit thyrotoxicosis and cell proliferation arrest in the neonatal testis, resulting in an approximately 75% reduction in testis size. This is accompanied by larger seminiferous tubules, impaired spermatogenesis, and a hormonal profile indicative of primary hypogonadism. A deficiency in the TH receptor-α fully normalizes testis size and adult testis gene expression in D3KO mice, indicating that the effects of D3 deficiency are mediated through this type of receptor. Similarly, genetic deficiencies in the D2 or in the monocarboxylate transporter 8 partially rescue the abnormalities in testis size and gonadal axis gene expression featured in the D3KO mice. Our study highlights the testis as an important tissue in which determinants of TH action coordinately converge to ensure normal development and identifies D3 as a critical factor in testis development and in testicular protection from thyrotoxicosis.