Human type III iodothyronine deiodinase (D3) catalyzes the conversion of T₄ to rT₃ and of T₃ to 3, 3′-diiodothyronine (T2) by inner-ring deiodination. Like types I and II iodothyronine deiodinases, D3 protein contains selenocysteine (SeC) in the highly conserved core catalytic center at amino acid position 144. To evaluate the contribution of SeC144 to the catalytic properties of D3 enzyme, we generated mutants in which cysteine (D3Cys) or alanine (D3Ala) replaces SeC144 (D3wt). COS cells were transfected with expression vectors encoding D3wt, D3Cys, or D3Ala protein. Kinetic analysis was performed on homogenates with dithiothreitol as reducing cofactor. The Michaelis constant of T₃ was 5-fold higher for D3Cys than for D3wt protein. In contrast, the Michaelis constant of T₄ increased 100-fold. The D3Ala protein was enzymatically inactive. Semiquantitative immunoblotting of homogenates with a D3 antiserum revealed that about 50-fold higher amounts of D3Cys and D3Ala protein are expressed relative to D3wt protein. The relative substrate turnover number of D3Cys is 2-fold reduced for T₃ and 6-fold reduced for T₄ deiodination, compared with D3wt enzyme. Studies in intact COS cells expressing D3wt or D3Cys showed that the D3Cys enzyme is also active under in situ conditions. In conclusion, the SeC residue in the catalytic center of D3 is essential for efficient inner-ring deiodination of T₃ and in particular T₄ at physiological substrate concentrations.