The FoxO3-dependent increase in type II deiodinase (D2), which converts the prohormone thyroxine (T(4)) to 3,5,3'-triiodothyronine (T(3)), is required for normal mouse skeletal muscle differentiation and regeneration. This implies a requirement for an increase in D2-generated intracellular T(3) under these conditions, which has not been directly demonstrated despite the presence of D2 activity in skeletal muscle. We directly show that D2-mediated T(4)-to-T(3) conversion increases during differentiation in C(2)C(12) myoblast and primary cultures of mouse neonatal skeletal muscle precursor cells, and that blockade of D2 eliminates this. In adult mice given (125)I-T(4) and (131)I-T(3), the intracellular (125)I-T(3)/(131)I-T(3) ratio is significantly higher than in serum in both the D2-expressing cerebral cortex and the skeletal muscle of wild-type, but not D2KO, mice. In D1-expressing liver and kidney, the (125)I-T(3)/(131)I-T(3) ratio does not differ from that in serum. Hypothyroidism increases D2 activity, and in agreement with this, the difference in (125)I-T(3)/(131)I-T(3) ratio is increased further in hypothyroid wild-type mice but not altered in the D2KO. Notably, in wild-type but not in D2KO mice, the muscle production of (125)I-T(3) is doubled after skeletal muscle injury. Thus, D2-mediated T(4)-to-T(3) conversion generates significant intracellular T(3) in normal mouse skeletal muscle, with the increased T(3) required for muscle regeneration being provided by increased D2 synthesis, not by T(3) from the circulation.