The interrelationship between plasma cortisol levels, iodine-iodide nutritional supplementation, plasma thyroid hormone levels (tri- and tetra-iodothyronine, T3 and T4 respectively), and infection intensity with the sea louse Caligus elongatus were investigated in Atlantic salmon, Salmo salar L., and Arctic char, Salvelinus alpinus (L.). Cortisol-implanted Atlantic salmon had significantly higher mean intensities of sea lice than salmon not implanted with cortisol. Untreated Arctic char had significantly higher plasma cortisol levels and sea lice infections than untreated salmon. Cortisol-implanted salmon had lower plasma levels of T3 and T4. Salmon and char treated with iodized feed and iodinated water had higher plasma T3 and T4 levels, higher plasma T3/T4 ratios, and lower plasma cortisol levels than controls. Sea lice infections were significantly reduced on salmon treated with either iodized feed (P < 0.05) or iodinated water (P < 0.05). Char treated with iodized feed also had significantly reduced infections (P < 0.05). In general, iodized feed had a greater effect than iodinated water in reducing sea lice numbers. This study indicates that elevated plasma cortisol levels in salmon and char result in lower plasma levels of thyroid hormone and an increased susceptibility to sea lice infections. It is concluded that providing the fish with sufficient iodine-iodide increases thyroid hormone levels, reduces plasma cortisol levels, and reduces susceptibility to sea lice infections.