The hypothalamic activation of thyroid hormones by type 2 deiodinase (D2), catalyzing the conversion of thyroxine to T3, is critical for the proper function of the hypothalamo-pituitary-thyroid (HPT) axis. Regulation of D2 expression in tanycytes alters the activity of the HPT axis. However, signals that regulate D2 expression in tanycytes are poorly understood. The pituitary adenylate cyclase-activating polypeptide (PACAP) increases intracellular cAMP level, a second messenger known to stimulate the DIO2 gene; however, its importance in tanycytes is not completely characterized. Therefore, we tested whether this ubiquitously expressed neuropeptide regulates the HPT axis through stimulation of D2 in tanycytes. PACAP increased the activity of human DIO2 promoter in luciferase reporter assay that was abolished by mutation of cAMP-response element. Furthermore, PAC1R receptor immunoreactivity was identified in hypothalamic tanycytes, suggesting that these D2-expressing cells could be regulated by PACAP. Intracerebroventricular PACAP administration resulted in increased D2 activity in the mediobasal hypothalamus, suppressed Trh expression in the hypothalamic paraventricular nucleus, and decreased Tshb expression in the pituitary demonstrating that PACAP affects the D2-mediated control of the HPT axis. To understand the role of endogenous PACAP in the regulation of HPT axis, the effect of decreased PACAP expression was studied in heterozygous Adcyap1 (PACAP) knockout mice. These animals were hypothyroid that may be the consequence of altered hypothalamic T3 degradation during set-point formation of the HPT axis. In conclusion, PACAP is an endogenous regulator of the HPT axis by affecting T3-mediated negative feedback via cAMP-induced D2 expression of tanycytes.