We report a novel 1 bp deletion (c.1834delC) in the MCT8 gene in a large Brazilian family with Allan-Herndon-Dudley syndrome (AHDS), an X linked condition characterised by severe mental retardation and neurological dysfunction. The c.1834delC segregates with the disease in this family and it was not present in 100 control chromosomes, further confirming its pathogenicity. This mutation causes a frameshift and the inclusion of 64 additional amino acids in the C-terminal region of the protein. Pathogenic mutations in the MCT8 gene, which encodes a thyroid hormone transporter, results in elevated serum triiodothyronine (T3) levels, which were confirmed in four affected males of this family, while normal levels were found among obligate carriers. Through in vitro functional assays, we showed that this mutation decreases cellular T3 uptake and intracellular T3 metabolism. Therefore, the severe neurological defects present in the patients are due not only to deficiency of intracellular T3, but also to altered metabolism of T3 in central neurones. In addition, the severe muscle hypoplasia observed in most AHDS patients may be a consequence of high serum T3 levels.