The effect of thyroglobulin (Tg)iodination on the proliferation and suppression of thyroid-specific lymphocytes was examined in vivo in the obese strain (OS) and Cornell strain chicken models of autoimmune thyroiditis. Spleen cells from OS chickens were able to transfer disease to Cornell strain recipients. The ability to transfer disease was markedly reduced if the donors were raised on an iodine-depleting regimen. This deficiency was corrected by immunization of donor chickens with iodinated Tg. Immunization with low iodine Tg was ineffective. Neonatal tolerance induction with either iodinated or low iodine Tg reduced thyroiditis in 2-week-old OS chickens. Spleen cells from these tolerized chickens transferred to 4-day-old OS chickens were less thyroiditogenic. These results indicate that thyroid autoreactive cells are responsive to iodinated Tg, but not to low iodine Tg. Both of the Tg preparations, however, can induce tolerance to the disease. We conclude that distinct regions of the Tg molecule regulate the proliferation and suppression of thyroid-reactive lymphocytes, respectively. Only the former is dependent on the iodination of Tg. These results emphasize the importance of Tg as a self-antigen and provide one mechanism by which iodine may induce autoimmune thyroiditis.