In order to examine the subcellular localization of outer ring T4- and rT3-monodeiodinating activities, nuclear, mitochondrial, microsomal, cytosol, and plasma membrane fractions of rat liver homogenate were incubated with either T4 or rT3 in phosphate buffer (pH 7.35) in the presence of 2 mM dithiothreitol for 15 min at 37 C, and the amount of product (T3 in the case of T4 and 3,3'-diiodothyronine in the case of rT3) was measured by specific RIA. The various tissue fractions were also examined for the relative concentration of various marker enzymes. T4 and rT3 monodeiodinating activities correlated better with enzyme markers of plasma membranes than of any other subcellular fraction in most tissue fractions. A fraction could be isolated, however, in which the monodeiodinating activities correlated better with the enzyme markers of microsomes than of plasma membranes. The various data suggest that plasma membranes and microsomes are two main sites of T4- and rT3-monodeiodinating activities. The location of T4 to T3 converting activity in the plasma membranes may serve to modulate the delivery of the more potent thyroid hormone, i.e. T3, into the cells.