Clinical and laboratory evaluations are reported on two patients with congenital goiter and hypothyroidism due to iodide organification defect. In one patient, a 31-year-old white male with severe mental retardation, administration of perchlorate caused discharge of 69% of the radioiodine accumulated in the thyroid gland. Thyroid tissue had negligible peroxidase activity in the tyrosine-iodinase, triliodide, and guaiacol assays. Preincubation of subcellular fractions with hematin restored activity. The restored enzyme was labile to high concentrations of H2O2 (5.6times 10-4 h2o2 produced inhibition in the triiodide assay). Heating of the enzyme for 5 min at 46 degrees C produced 50% inactivation, while higher temperatures were required to half-inactivate normal peroxidases. This case represents a second example of the "peroxidase apoenzyme-prosthetic group defect" causing congenital goiter. The second patient, an example of the "deficient peroxidase defect," was a 10-yr-old girl with 35% discharge of thyroidal radioiodine by perchlorate. Peroxidase activity in the goiter tissue was quantitatively decreased (10%-20% of normal values) but kinetically normal with respect to apparent Km for H2O2. Hematin had little effect on the enzyme. Peroxidase activity had abnormal subcellular distribution, since pellets sedimenting between 39,000 and 105,000 g contained most of the activity. Normal thyroglobulin was observed in the thyroid gland of the patient. Two distinct defects of the peroxidase system can produce congenital goiter by limiting organification of iodide.