Thyroid hormone signaling during a postnatal period in the mouse is essential for cochlear development and the subsequent onset of hearing. To study the control of this temporal dependency, we investigated the role of iodothyronine deiodinases, which in target tissues convert the prohormone thyroxine into triiodothyronine (T3), the active ligand for the thyroid hormone receptor (TR). Type 2 5′-deiodinase (D2) activity rose dramatically in the mouse cochlea to peak around postnatal day 7 (P7), after which activity declined by P10. This activity peak a few days before the onset of hearing suggests a role for D2 in amplifying local T3 levels at a critical stage of cochlear development. A mouse cochlear D2 cDNA was isolated and demonstrated near identity to rat D2. In situ hybridization localized D2 mRNA in periosteal connective tissue in the modiolus, the cochlear outer capsule and the septal divisions between the turns of the cochlea. Surprisingly, D2 expression in these regions that give rise to the bony labyrinth was complementary to TR expression in the sensory epithelium. Thus, the connective tissue may control deiodination of thyroxine and release of T3 to confer a paracrine-like control of TR activation. These results suggest that temporal and spatial control of ligand availability conferred by D2 provides an unexpectedly important level of regulation of the TR pathways required for cochlear maturation.