The activity of the enzyme thyroxine dehalogenase and the nature of products of deiodination of thyroid hormones were studied in skeletal muscle of normal and thyroidectomized rats. The capacity to deiodinate thyroxine was also measured after administration of L-thyroxine, D-thyroxine, 2,4-dinitrophenol and in animals maintained on diets of different iodine contents. A 2 to 3-fold depression in the level of thyroxine dehalogenase occurred 3 months after thyroidectomy which was reversed by the administration of L-thyroxine. Injection of L-thyroxine also stimulated thyroxine dehalogenase activity in normal rats; the increase in enzyme activity was not merely a response to administration of substrate since D-thyroxine, although an almost equally good substrate, failed to alter enzyme activity. The enzyme increased in parallel with the oxygen consumption of the animals treated with L-thyroxine. This relationship does not seem to be a non-specific manifestation of increased cellular metabolic activity because 2,4-dinitrophenol administration failed to cause a similar effect. 3,5,3′-triiodothyronine was not a major product of deiodination of thyroxine; the function of thyroxine dehalogenase therefore does not appear to be that of the conversion of thyroxine to its »active« form. Thyroxine dehalogenase is not uniquely involved in the recovery of iodine from the spent thyroid hormone since its activity was independent of the level of dietary iodine. It is therefore concluded that enzymic deiodination of thyroid hormones by skeletal muscle is linked in some way to their calorigenic action, although the exact nature of this relationship remains unknown.