Iodination of thyroglobulin, the key event in the synthesis of thyroid hormone, is an extracellular process that takes place inside the thyroid follicles at the apical membrane surface that faces the follicular lumen. The supply of iodide involves two steps of TSH-regulated transport, basolateral uptake and apical efflux, that imprint the polarized phenotype of the thyroid cell. Iodide uptake is generated by the sodium/iodide symporter present in the basolateral plasma membrane. A candidate for the apical iodide-permeating mechanism is pendrin, a chloride/iodide transporting protein recently identified in the apical membrane. In physiological conditions, transepithelial iodide transport occurs without intracellular iodination, despite the presence of large amounts of thyroglobulin and thyroperoxidase inside the cells. The reason is that hydrogen peroxide, serving as electron acceptor in iodide-protein binding and normally produced at the apical cell surface, is rapidly degraded by cytosolic glutathione peroxidase once it enters the cells. Iodinated thyroglobulin in the lumen stores not only thyroid hormone but iodine incorporated in iodotyrosine residues as well. After endocytic uptake and degradation of thyroglobulin, intracellular deiodination provides a mechanism for recycling of iodide to participate in the synthesis of new thyroid hormone at the apical cell surface.