Iodide is required for thyroid hormone synthesis in mammals and other vertebrates. The role of both iodide and iodinated tyrosine derivatives is currently unknown in lower organisms, yet the presence of a key enzyme in iodide conservation, iodotyrosine deiodinase (IYD), is suggested by genomic data from a wide range of multicellular organisms as well as some bacteria. A representative set of these genes has now been expressed, and the resulting enzymes all catalyze reductive deiodination of diiodotyrosine with kcat/Km values within a single order of magnitude. This implies a physiological presence of iodotyrosines (or related halotyrosines) and a physiological role for their turnover. At least for Metazoa, IYD should provide a new marker for tracing the evolutionary development of iodinated amino acids as regulatory signals through the tree of life.