Thyroid hormone activation is catalyzed by two deiodinases, D1 and D2. Whereas D1 is a stable plasma membrane protein, D2 is resident in the endoplasmic reticulum (ER) and has a 20-min half-life due to selective ubiquitination and proteasomal degradation. Here we have shown that stable retention explains D2 residency in the ER, a mechanism that is nevertheless over-ridden by fusion to the long-lived plasma membrane protein, sodium-iodine symporter. Fusion to D2, but not D1, dramatically shortened sodium-iodine symporter half-life through a mechanism dependent on an 18-amino acid D2-specific instability loop. Similarly, the D2-specific loop-mediated protein destabilization was also observed after D2, but not D1, was fused to the stable ER resident protein SEC62. This indicates that the instability loop in D2, but not its subcellular localization, is the key determinant of D2 susceptibility to ubiquitination and rapid turnover rate. Our data also show that the 6 N-terminal amino acids, but not the 12 C-terminal ones, are the ones required for D2 recognition by WSB-1.

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