This gene encodes an enzyme that catalyzes the oxidative NADPH-dependent deiodination of mono- and diiodotyrosine, which are the halogenated byproducts of thyroid hormone production. The N-terminus of the protein functions as a membrane anchor. Mutations in this gene cause congenital hypothyroidism due to dyshormonogenesis type 4, which is also referred to as deiodinase deficiency, or iodotyrosine dehalogenase deficiency, or thyroid hormonogenesis type 4. Alternative splicing results in multiple transcript variants.