Type II deiodinase (D2) plays a critical role in controlling intracellular T3 concentration and early studies indicated a follicular but not a parafollicular C-cell origin of D2 activity in the thyroid gland. Here, we show that D2 is highly expressed in human medullary thyroid carcinoma (MTC), a tumor that arises from the C-cells. D2 transcripts were detected in all MTC samples obtained from 12 unselected MTC patients and the levels of D2 activity were comparable to those found in surrounding normal follicular tissue (0.41+/-0.10 fmol min mg protein vs. 0.43+/-0.41 fmol min mg protein, P=0.91). Additional analysis in the TT cells, a human MTC cell line, demonstrated that the D2 expression is downregulated by thyroid hormones and enhanced by cAMP analogs and dexamethasone. The thyroid hormone receptor alpha1 and beta isoforms were also detected in all MTC samples and in TT cells, thus suggesting a potential role of T3 locally produced by D2 in this neoplastic tissue.